Reconciliation automation tools for investment managers are more sophisticated and reliable than ever. Gone are the days of manually reconciling accounts in Excel or spending lots of time and energy figuring out how to run the portfolio accounting software to get the daily reporting done.
While some advisories have their reasons for doing things the “old school” way, the trends in the financial services industry show that automation is helps firms achieve their operational and financial objectives, and money managers are jumping on board.
Not only is finding the right reconciliation automation solutions important, but having the ability to
implement the tools properly is equally important.
Reconciliation Automation Tools to Help Money Managers
Robotic Process Automation
Robotic Process Automation (RPA) is an artificial intelligence software that performs tasks otherwise done by humans, and the software is programmed with logical capabilities in following the routine reconciliation reporting steps the way a person would.
- If x happens, then do y
- When a = b , do c
- When abc does not match with xyz, do 123
RPA systems have these logical thought processes, and they can be useful in the following areas:
- Importing custodian data
- Translating securities
- Identifying cash and positions reconciliation breaks
- Finding errors or missing data in the price files and security master maintenance file
Having a system like this is especially helpful when dealing with Separately Managed Accounts, as managing increased volumes and complexity of data heavily consume time and resources.
The cost savings by utilizing robotic processing automation are noteworthy. According to a McKinsey interview, a series of case studies revealed that the return on investment by implementing RPA ranges anywhere from 30% to 200% in the first year.
Reconciliation Quality Control Systems
Robotic Process Automation for reconciliation clearly has its benefits, but verifying data accuracy is necessary, and having a quality assurance system will complement the reconciliation automation tools.
A QC system can check for reconciliation breaks, missing information in the security and price files, and irregularities in the data. These systems can also track the processing time, making sure the work gets done before the deadline.
You can either customize your QC system by building one from scratch, or you can use tools like SmarterTrack.
Leveraging Expertise from Automated Technology and Portfolio Accounting Specialists
It’s one thing to know that you need reconciliation automation tools, but it’s another getting them set up. The challenges investment management companies face with implementation are time constraints, concerns it doesn’t fit in the budget, and lacking the in-house talent to carry out the changes.
Fund administration back-office outsourcing providers could help implement the changes you’re looking for. These firms should have the resources and operational know-how to implement RPA and quality assurance systems, and they can do it in a cost-effective and timely manner.
Once everything is up and running, the outsourcing company can oversee the daily reconciliation reporting processes for you. Essentially you could be killing multiple birds with one stone by getting the reconciliation automation tools, having the work done for you, and lowering your operating costs. One of our previous blogs goes into more details about the benefits of automation tools for investment managers.
Utilizing Reconciliation Automation Tools
Reconciliation automation tools in the form of RPA combined with a proper QA system will help your operations achieve greater efficiency, moving on from outdated and inefficient practices.
If you know you want the automated technology but just don’t know where to begin, then talk with a fund administration outsourcing company. They have the technological and labor resources to implement the developments when you’re worried time, money, and in-house talent are all lacking to do it effectively on your own.
And with investment management business costs rising in all directions, operations directors can play their part in reducing expenses by introducing new automated technology with the help of a third-party outsourcing provider.
Empaxis is a leading provider of middle- and back-office outsourcing services for asset managers and hedge funds.