Reconcilable Differences: A Primer

Figure 1: Reconciliations past, present and future.

This report is a high level overview of the reconciliation technology that is evolving and of the trends that are driving client adoption and vendor innovation.

A reconciliation is defined as being the action of comparing two or more sets of records, or data, to ensure they are in alignment, and further identifying (and resolving) any discrepancies between them. Reconciliation activity is a key tool in mitigating operations risk and financial loss; it presents an opportunity for capital markets firms to identify and correct deep-rooted sources of accounting or system errors, such as incorrect reference data or unsynchronized internal applications. However, the reconciliations function has been one of the most underappreciated areas of investment operations in terms of attracting investment over the past few decades. As the COVID pandemic shined a spotlight on the need to transform operations across the industry to reduce costs and mitigate risks, the reconciliations process was recognized as a critical accounting function ripe for further automation.

Upcoming Celent reports will cover the vendor landscape in more depth.