Real time banking

SunGard's Richard Chapman discusses the importance of reconciliation and new software

SunGard's IntelliMatch Enterprise Management Studio, announced during the first Sibos banking and finance conference held in the Middle East, is another step in the direction of real-time, total operations assessment.

Designed to enable reconciliation teams to monitor the behavior of the entire reconciliation landscape--including instant flags and rapid responses--the software complements SunGard's already popular suite of IntelliMatch Operational Control reconciliation software.

Richard Chapman, Global Director for product management of SunGard's reconciliation software, sat down with Capital Business during a very busy Sibos day to discuss the importance of rapidly changing reconciliation software in the banking sector.

"The European and North American base is very consolidated [in terms of banking institutions], but there's been an explosion in the Middle East, Asia, and Africa. So there's been a real interest in cost-saving and reconciliation," Chapman said, describing the rising need for such software. "And when I think about why that might be, certainly in the last three or four years with the financial crisis, there has been a lot more awareness of operational processes. Particularly in the Middle East, which is a very cash-oriented environment, we found that as the transactions were occurring, some of these processes weren't in place. A recognition of some of the underlying processes [in transaction banking] is becoming more critical."

"The subtle difference in the 'west' is--because they've had reconciliation processes in place for years, sometimes even decades--their challenges have been more centered around 'how do I manage this very fragmented reconciliation software,'" Chapman continued.

"They probably have ten or more reconciliation systems, and four or more reconciliation teams. And with these fragmented reconciliation environments where they have partial information some places, full information in others, plus inconsistent reporting and different operating systems or even different versions of the same product...and they're trying to manage that infrastructure in a cost-effective way, and it is very hard to do that," Chapman added, echoing a recent issue of software management for companies.

For the Middle East, "there has been an explosion of requests for help with operation processes, and they've actually progressed at a very rapid rate." With new and rapidly growing needs for efficient reconciliation and operational processes, the Middle East, Asian, and African markets have all grown as focal points for banking software development.

With SunGard, this is where the new IntelliMatch Enterprise Studio becomes useful. While the platform itself does not carry out reconciliation (that would be SunGard's IntelliMatch Operational Control suite); the Enterprise Studio allows users to document expectations for reconciliation, including output and match rates, then monitor the execution of tasks across the board.

"So for these more established companies, who have been automating reconciliation for a long time, their problem is that there's all these different versions," Chapman explains. "The Enterprise Management Studio solves that by coming in above it, creating an infantry then in real-time evaluating it and executing all the tasks required against that infantry to make sure you deliver your reconciliations on time. It's something I would say is more operationally mature for organizations that have been using reconciliation for some time."

"Now, there's an explosion of systems management need, and the elimination of manual processes of reconciliation in the Middle East and Asia. There's a deep trajectory I think these organizations are on. Thinking purely around the [reconciliation] business, more organizations are wanting to build out reconciliation services and put all their reconciliations into one platform," he added.

The changing face of banking software technology

A running theme in the field of banking software for some time now has been its transformation--or lack of one--in light of continual developments in mobile and tablet technology. The place of back office banking in new tech practice was a big question on the table during Sibos conference conversations.

"I would say the exciting part of the reconciliation world is the change in technology. It's been an interesting journey for us," Richard explained, launching into the full story of SunGard's software transformations over the course of the past few years. About three years ago the SunGard team, with Chapman included, developed the 'future' of reconciliation software in tablet form and presented it to a study group of office users and bank professionals. It bombed.

"People said, 'what are you talking about? There's no way we're going to be using a tablet in the back office...we don't even use the web client yet, you must be mad thinking we're going to use a tablet,'" Chapman recalled. "But we are a technology company, and our job as a software provide is to build on these things, to capitalize on these trends....so, we went ahead and built it anyway."

Last year, Richard recalls, they gathered another group, and a demonstration of the software was carried out. This time, when managers and reconciliation professionals were asked if they would find this technology useful, "all their hands went up." Of course, Richard pointed out, when he asked if the managers' reconciliation staff--those who actually carry out the procedures--would use it, nobody thought so.

The strength of SunGard's new Enterprise software thusly lies in its real-time assessment and layout, ideal for the types of higher-up management that need an instant and clear overview. But in Chapman's view, there's more in store for back office reconciliation users.

"It's extremely valuable for management because you get real-time information on the completion of reconciliation and tasks across the landscape; from a risk management perspective that's fantastic," he admits. "When you start playing with what we've built...it's so fast, it's so intuitive. If you could put that in the hands of an actual operational user, they could really be completing their work much faster. But it's just a question of when will that technology hit."

Regulatory terms and reconciliation

"Regulation is driving innovation in the reconciliation process[SO1] ," Chapman said, ignoring negative sentiment at Sibos that regulations such as FATCA and Basel III were causing industry suffering. In Basel III, he points out, the regulations have encouraged "proactive" reconciliation rather than reactive, pre-empting potential disasters that could hit banks with huge costs.

Ultimately, while admittedly costly to enact at the start, Chapman feels that regulations are "helping organizations understand that you really need to be validating every aspect of your process." Chapman continued that he found the regulations almost "inspirational" to the banking sector's reconciliations processes, particularly among Western institutions that have noticed a need for control and transparency in their environment.

"People are realizing that certain regulations, while costly to implement, can actually deliver cost-saving," he said. "With the crisis, we know that this could happen again, and we need controls and transparency...and suddenly the back office comes back into focus."

"If you don't have a systemic approach, this is an enormous risk," he added. "The financial crisis put some necessary focus on operational risk."