Reimagining Reconciliation in Capital Markets: Improving Automation with Innovative Technology

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9 August 2020

New technology such as cloud, artificial intelligence (AI), and machine learning (ML) are offering new opportunities to improve automation and reduce cost of ownership in reconciliation and are driving the evolution of vendor solutions.


Reconciliation is a critical part of capital markets operations because the inability to get it right can result in business losses, suboptimal capital usage, regulatory fines, and associated reputational risks. Therefore, reconciliation is not just a cost and efficiency challenge, but also an operational risk issue. The challenges in reconciliation have been growing due to regulatory and market structure changes. More recently, staff shortages and resource crunch due to the COVID-19 pandemic are compounding the challenges, forcing capital markets firms to improve automation and efficiencies in reconciliation.

COVID-19 Is Accelerating Digitalization and Intensifying Scrutiny on Reconciliation

Source: Celent

The landscape of technology solutions used in reconciliation is complex and diverse. It includes manual event-driven processes, basic Excel-based tools, legacy applications developed in-house, traditional third party software which is primarily rules driven, and more recently, solutions leveraging next-generation technology such as AI and ML.

Third party reconciliation solutions have grown in adoption in capital markets. The vendor market in reconciliation has become crowded where several players with varying backgrounds, maturity, value propositions, technology sophistication, and price points compete. This report profiles 21 reconciliation software solutions representing a diverse mix of players in the market; they are: AutoRek, Broadridge, Duco, Electra Reconciliation, EZOPS, Finastra, FINBOX SOLUTIONS, FIS, Fiserv, Gresham Technologies, Infosys, Intellect Design Arena, IHS Markit, London Stock Exchange Group (UnaVista), Operartis, ReconArt, SmartStream, SS&C Advent, TCS, Tookitaki, and Torstone. Additionally, it discusses client-specific work that has been conducted by the IT services provider Wipro.

The features, functionalities, and sophistication of the vendor solutions continue to expand as growing client demand, market competition, and advancements in technology drive their evolution and modernization. Two themes are increasingly becoming important: greater adoption of cloud for lowering total cost of ownership and applying intelligent automation techniques to improve efficiency. Advanced analytics will see further adoption because it can greatly improve the performance of existing systems. Instead of replacing existing systems, we expect, at least in the next three years, AI and ML systems to be used in conjunction with rules-based systems to augment and enhance existing processes.

Cost of technology ownership will be increasingly important, and capital markets firms will focus on flexible and agile operations to respond to continuous market and regulatory changes. Cloud and API technology can play an important role in achieving those goals. They will also be instrumental in the adoption of intelligent automation techniques because AI will need high computing power on an on-demand basis.

As capital markets firms seek to reduce costly and lengthy internal IT projects, the demand for self-servicing capabilities will grow. Solutions that allow business users to quickly and easily onboard and maintain reconciliation without needing to rely on the vendor partner or internal IT teams will be in high demand.