reimagining reconciliation: improving automation with ... · with 20 years’experience in the...
TRANSCRIPT
Reimagining Reconciliation:
Improving Automation with
Innovative Technology in
Financial Services
Wednesday 24th June 2020
Agenda
• Introduction – Andy Sehulster, ICC
• Arin Ray - Celent
• Marc McCarthy - AutoRek
• Q&A
Introduction
Marc McCarthy – Senior Vice President, International Sales, AutoRekWith 20 years’ experience in the financial services industry, Marc has spent most of his career consulting the
world’s largest financial institutions on operational and financial controls. Having joined AutoRek in 2016, he
is responsible for the company’s partnership program and the North American market as SVP for International
Sales.
Andy Sehulster – President, ICC Andy was named President of ICC in July 2015, after serving as Chief Operating Officer (COO) for the
previous three years. ICC specializes in maximizing the value of investment systems and data for institutional
investors, largely through improving automation. During his tenure with ICC, Andy has led the firm through a
period of rapid expansion, during which ICC more than tripled in size.
Arin Ray – Senior Analyst, CelentArin Ray is a Senior Analyst with Celent based in the firm's New York office with over a decade’s experience
in tracking business, regulatory, and technology trends in financial services. He has published extensively on
issues related to trading, clearing, settlement, transaction processing, reconciliation, operational risk, and
process automation. His advisory engagements have included developing technology strategy for financial
institutions, benchmarking, and market entry and expansion studies for financial institutions and technology
providers.
Arin Ray
Celent
REIMAGINING RECONCILIATION
IMPROVING AUTOMATION WITH INNOVATION
TECHNOLOGY IN FINANCIAL SERVICES
Arin RaySenior Analyst, [email protected]
6© CELENT
DIGITALIZATION OF FINANCIAL SERVICES ACCELERATED BY COVID-19
Longer Term Trends
❑ Growing digitalization of financial serviceso Banking and payments; Trading and capital markets; Insurance; Retail commerce o Risk management and regulatory compliance
❑ Increasing speed, volume, and complexities of transactionso Demand for faster and real-time transaction processing; need to improve STP rateso Rapid cross border transfers and settlement
❑ Explosion in volumes and types of datao Fragmentation of data architecture, standards, file formatso Growing regulatory scrutiny on data management, reporting, and governance
Impact of COVID-19
❑ Major shifts in transactional patternso Move to online purchases and transactionso Volatility in transaction and trading volumes
❑ Operational disruption at financial institutionso Unavailability of resources; need to support remote worko Backlogs and operational bottlenecks
❑ Entering a new era of digital financial serviceso Short, medium, and long term impact of COVID-19 and its implications
7© CELENT
Technology
• Legacy systems
• Inefficient Data Management
• Lack of Innovation
Processes
• Distributed and siloed operations
• Lack of automation, STP
• Reliance on manual intervention
LegacyArchitecture
ManualProcessesLimited
Innovation
Hybrid Sourcing
Lackof STP
Sourcing
• In-house, offshoring, nearshoring, outsourcing
• Commoditization vs. differentiation
RECONCILIATION OPERATIONS SUFFER FROM LEGACY TECHNOLOGY AND MINDSET
8© CELENT
RECONCILIATION AUTOMATION LEVELS VARY GREATLY ACROSS THE INDUSTRY
Leaders Industry Average Laggards
Operational approach
Shared services, center of excellence
Disparate and fragmented reconciliation operations
No clearly defined reconciliation functions
Technology approach Single (or a few) third party software
Patchwork of 3rd party software, in-house built apps
No or limited automation techniques used
Match rate and STP High, 90% or above High in select areas, moderate overall (50-60%)
Low
Alerting and notification
Fully Automated Partially automated Manual
Exception handling Escalation and exception management process clearly defined
Exception management partly defined, partly ad-hoc
Exception handing not well defined and mostly ad-hoc
Monitoring Automated daily reports with detailed status tracking
Some reporting with limited indicators
Minimal reporting and status tracking
Reporting and documentation
Well documented and archived Documentation and archiving only in some areas with limited controls
Minimal documentation or archiving
9© CELENT
THE CLOUD MODEL HAS THE POTENTIAL TO MEET THE EVOLVING NEEDS IN RECONCILIATION
Elasticity and scalability, on-demand
APIs and microservices
Efficiency and Automation
Standardization and centralization
Shared resources, variable costing
Speed of Innovation
10© CELENT
End UsersIntermediariesCore cloud providers
SEVERAL CLOUD MODELS HAVE EMERGED WITH GROWING PREFERENCE FOR CLOUD BASED MANAGED
SERVICES
Financial institutions
Packaged software solutions
Cloud native solutions
Managed service solutions
Internal cloud for infrastructure, platform, proprietary apps
Cloud resource providers
11© CELENT
Artificial Intelligence
The science of training computers to perform tasks mimicking human reasoning.
▪ Can analyze large volumes and different types of data with greater speed and accuracy.
▪ Can be applied to solve narrow and well-defined computation intensive problems.
Machine Learning
A subset of AI that automatically learns and improves from experience without being explicitly programmed.
▪ Supervised ML applies learnings from the past to new data using labeled examples to predict future events.
▪ Unsupervised ML discovers hidden patterns, structures, and networks from unlabeled data.
Robotic Process Automation
Software that mimics human actions by automating simple and repetitive tasks across applications.
• Emphasis more on automating workflow and less on analytics.
• Easy to configure and implement, and limited technical expertise needed to run them.
INTELLIGENT AUTOMATION TECHNIQUES ARE POISED TO REVOLUTIONIZE DATA OPERATIONS
12© CELENT
AI Applications
▪ Data quality and integrity checks
▪ Map data fields
▪ Set up match rules
▪ Optimize existing match rules
▪ Find new match rules
▪ Automate break resolution process with RPA
▪ Root cause analysis and reasons for breaks
▪ Automatically suggest ways to resolve breaks
Set up new Reconciliation
Resolve BreaksImprove Match
RatesReconciliation
Process
INTELLIGENT AUTOMATION TOOLS CAN BE APPLIED ACROSS THE RECONCILIATION
PROCESS CHAIN
13© CELENT
Improving automation and STP will be imperative for cost and risk optimization. Advanced analytics will play a key role here.
Financial institutions seek to reduce costly and lengthy internal IT projects. The demand for self-servicing capabilities will grow as a result.
Lower cost of technology ownership, and flexible and agile operations will be needed to respond to continuous market and regulatory changes. Cloud and API technology will be needed to achieve them.
Financial institutions are increasingly retreating from investing in innovation in non-core functions. Innovation in reconciliation will be driven by technology vendors.
ADVANCED ANALYTICS, AGILE OPERATIONS, AND SELF-SERVICING CAPABILITIES WILL DRIVE THE
EVOLUTION OF RECONCILIATION
Marc McCarthy
AutoRek
Current status
EXCEL
LEGACY SYSTEMS
HYBRID APPROACH
LIMITED MI
DATA ANALYSIS
INACCURATE MATCHING
DATA ONBOARDING
Remaining pain points
MANUAL INVESTIGATIONS
RECON ONBOARDING
Technical enablers
RPA AI / ML NLP Cloud
Impact of automation
Legacy FINTECHS
Focus areas for the future
Cloud Ready
Rapid Deployment
Cost Effective
Easy to Use
Self Sufficiency
2.0
Improved Insight
Remote Working
Focus area – cloud
Cloud Ready
Rapid Deployment
Cost Effective
Easy to Use
Self Sufficiency
2.0
Improved Insight
Remote Working
SINGLE TENANCY
MULTI TENANCY
ACCESS ANYTIME ANYWHERE
Focus area – deployment
Cloud Ready
Rapid Deployment
Cost Effective
Easy to Use
Self Sufficiency
2.0
Improved Insight
Remote Working
INSTANT RECONCILIATIONS
FASTER ROI
MORE AUTOMATED RECONCILIATIONS
Focus area – roi
Cloud Ready
Rapid Deployment
Cost Effective
Easy to Use
Self Sufficiency
2.0
Improved Insight
Remote Working
REDUCE SET UP COSTS
FTE SAVINGS
MORE THAN RECONCILIATIONS
Focus area – usability
Cloud Ready
Rapid Deployment
Cost Effective
Easy to Use
Self Sufficiency
2.0
Improved Insight
Remote Working
SIMPLIFICATION
MACHINE LEARNING
AI
Focus area – self sufficiency
Cloud Ready
Rapid Deployment
Cost Effective
Easy to Use
Self Sufficiency
2.0
Improved Insight
Remote Working
INTERACTIVE
INTUITIVE
ANY DEVICE ANYWHERE
Focus area – analytics
Cloud Ready
Rapid Deployment
Cost Effective
Easy to Use
Self Sufficiency
2.0
Improved Insight
Remote Working
REAL TIME MI
DATA POINTS
BUSINESS INTELLIGENCE
Focus area – wfh
Cloud Ready
Rapid Deployment
Cost Effective
Easy to Use
Self Sufficiency
2.0
Improved Insight
Remote Working
COLLABORATION
ONLINE
CENTRALIZED MI
Outcome
IncreaseThroughput
24x7
ReducedCost
Efficient
ReduceWorkload
Fast
EliminateErrors
Flawless
EmployeeEngagement
Focus
Q&A Session
Thank you for listening
Arrange an AutoRek Demonstration
TWITTER/@AutoRek +44 (0) 845 603 3613
10 Montrose St
Glasgow
G2 4HU
8/9 Lovat Lane
London
EC3R 8DW