Effective account reconciliation is extremely important in today’s competitive financial landscape. The reconciliation process ensures that the data available in the bank’s system is valid and accurate. Reconciliation of banking transactions also helps in identifying bank errors and detecting frauds. Banks also perform reconciliation activities to ensure the relevant fees and charges are tracked for the applicable transactions.
Characteristics of an effective automated reconciliation solution can be summarized as given:
- Ability to extract raw data
An effective reconciliation solution must be able to extract data from files in any format. Most of the interchange files arrive in ASCII file format or in EBCDIC format. In addition, the file formats for EJ, Switch and Host files can be varied making it extremely difficult to use a standard file reader.An efficient solution which can read the multiple file formats along with the raw data files to extract data into the system for matching, saves a lot of trouble to the user, as the bank does not have to go through the cumbersome process of transforming the incoming file format.
- High performance for matching of records
Banking transactions for large banks can easily reach millions of records in a day. The system should be able to extract and parse the data from multiple input files while supporting multiple file formats. Reconciliation activities are usually run daily at the back office which makes high performance an absolute must for any effective reconciliation solution.Market does provide such reconciliation solutions that can match millions of transactions in a matter of seconds.
- Rule based reconciliation
An effective reconciliation solution must support rule based reconciliation. This ensures the solution is configurable and will support multiple reconciliation types. The rules could be tweaked according to specific client requirements leading to greater client satisfaction.Rule based matching should also support exact and relax matching of transactions as well as matching between records found in multiple files.
- Ability to force match and settle transactions in bulk
Unmatched transactions can run into thousands and force matching or settling each transaction at a time can be extremely time-consuming, defeating the purpose of an automated reconciliation solution. An effective solution should support force matching and settlement of unmatched transactions in bulk to save time and effort of the bank.
- Generation of settlement vouchers
Marking the unmatched transactions as settled in the solution may lead to issues – if the same transaction is not marked as settled in the core banking system (CBS) of the client. The reconciliation solution hence should ensure that the transactions marked as settled in the system are also marked as settled in the host. This is achieved by generating the settlement vouchers which are posted to the CBS.
- Extensive reporting capability with multiple dashboards.
Reporting gives visibility of the data that was reconciled. Hence, any effective reconciliation solution should provide extensive reporting capabilities with both matched and unmatched reports and granular information about the data in the files.Multiple dashboards should be supported for individual roles to ensure the relevant data is visible to the concerned members.
- Dispute Management and Chargeback support
A bank will need to create and respond to disputes by customers or interchanges. An effective reconciliation solution should ensure the end-to-end dispute management system is available along with chargeback workflow support.This ensures complete financial closure for any disputes that may arise for un-reconciled transactions.
- Secure and Robust system
The Reconciliation system handles highly sensitive data and should be secure to avoid any malicious attacks. Any manual changes should be logged and validated using inbuilt maker/checker functionality to ensure control and visibility. Access control is established through role based access and full audit trail needs to be maintained for any activities in the system.
- Relevant Certifications
The reconciliation solution should have relevant and latest PA-DSS certifications and PCI-DSS certifications. These certifications confirm that the necessary security standards are being followed and maintained by the solution.
This a guest post written by Abhishek Prasad from FSS.
FSS provides a comprehensive data analysis platform that addresses complete reconciliation needs of banks and financial institutions. The FSS Reconciliation Suite is successfully used by more than 27 financial institutions worldwide and enjoys more than 70% market share in India for reconciliation of debit card transactions.
FSS Reconciliation Suite is an effective solution to the reconciliation needs for any bank or payments processor. The solution simplifies the reconciliation process and helps the financial institution achieve its reconciliation goals.
For more information on FSS Reconciliation Suite, visit http://www.fsstech.com/products/reconciliation-settlement/
FSS is a sponsor at Cards & Payments Asia 2016 happening this April 20-21, at the Suntec Convention Centre, Singapore. To find out more about FSS, visit them at stand M01 . Download the event brochure or visit the event website for more details