Nostro Reconciliation - in the past, the present and the future

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Nostro Reconciliation is the recurring need to compare data/transaction integrity between internal and external sources. The presentation will discuss an approach to reduce cost for the reconciliation while increasing focus on exception managment.

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  • 020205aMS7_040216_148_v5
  • 020205aMS7_040216_148_v5
  • Nostro Reconciliation - in the past, the present and the future

    1. 1. Frankfurt, 21 June 2012STP in der „Cloud“ - Vision oder Realität ?Frankfurt, 21 June 2012Nostro reconciliationIn the past, the present and the futureRichard F. ZbindenSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission
    2. 2. Frankfurt, 21 June 2012Agendas Set the scene - introductions Objective – the ideal world of settlements Strategy and roadmap to achieve optimizations Strategy implementations Reflections on approachs Reflections on cost and cloudSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 2
    3. 3. Frankfurt, 21 June 2012Set the scene - settlement ILLUSTRATIVE Retail and Private Banking Pattern Communication Capturing Interpretation Application Fulfilment Recognition /Feedback 1. Client 3. Client 6. Discr. 8. Procure- data profiling 5. Clients Portfolio ment Demand financial Management planning 10. 11. Client − Processing reporting Supply Governance 7. Non- 9. Limit 2. Market 4. Research process discretionary monitoring data AdvisorySoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 3
    4. 4. Frankfurt, 21 June 2012In an ideal world of settlement we would have ILLUSTRATIVEs 100% matching rates No contractual or organizational risks No data quality issuess No investigations to be made No reconciliation would be required, but…Software for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 4
    5. 5. Frankfurt, 21 June 2012The reality is differentThe key drivers for reconciliations ares Managing the counter party riskss Control of data quality & settlement riskss Treasury managements Manage liquiditySoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 5
    6. 6. Frankfurt, 21 June 2012How do we achieve optimization?Strategys Improve data quality for all business processess Move from asynchronous to middleware interfacess Reduce system’s complexity while keeping audit qualitys Reduce supplier/provider complexity Roadmap to optimizationSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 6
    7. 7. Frankfurt, 21 June 2012 Roadmap to optimization ILLUSTRATIVEOptimization Automatic Matching Transaction Lifecycle Integrated Reconciliation level Management (TLM) & Exception Agents Maximize automation – minimize monitor overall investigation work transactions use standard flows matching tools • Get central visibility • Transform an efficient into an effective reconciliation • Collaborate better with • Collaborate better with internal and external internal and external • Improve matching rates • Destroy silo people/partners reconciliation time Reduce cost for Manage complexity Focus on risks reconciliation through transparency Software for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 7
    8. 8. Frankfurt, 21 June 2012Strategy implementationImprove data quality for all business processess Improve reference quality for messagings Eliminate media gapss Define business process for automatic value date or amount differencess Improve quality of reversals and amendments of transactionsSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 8
    9. 9. Frankfurt, 21 June 2012Strategy implementationMove from asynchronous to middleware interfacess Neartime (nearly synchronous) vs. asynchronous or batchs Create visibility on message flowss Improve data quality of statementsSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 9
    10. 10. Frankfurt, 21 June 2012Strategy implementationReduce system’s complexity while keeping audit qualitys Simplify application landscapes Reduce number of interfacess Choose value added supplierSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 10
    11. 11. Frankfurt, 21 June 2012Strategy implementationReduce supplier/provider complexitys Outsource messaging and reconciliation as PaaS or SaaSs Outsource the entire reconciliation business process except the manual exception handling and related investigationss Create shared service center using a private or hybrid cloud for high volumes of transactions (industrialization)Software for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 11
    12. 12. Frankfurt, 21 June 2012Reflections on approach ILLUSTRATIVEWhat do you aim for? Highly efficient reconciliation Sterci (Cloud) e.g. SAP Sterci TLM Corona Manual reconciliation independent No audit trail audit trailSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 12
    13. 13. Frankfurt, 21 June 2012Reflections on approach ILLUSTRATIVEWhat is your focus? Focus on exception management Investment Banking Credit operations Private Banking Retail banking Focus on reconciliation Automatic Manual matching matchingSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 13
    14. 14. Frankfurt, 21 June 2012 Reflections on cost ILLUSTRATIVEReconciliation cost per transaction low volume medium volume low volume in cloud high volume high volume in private cloud maturity level Automatic matching Integrated matching Agent based matching & exception management Software for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 14
    15. 15. Frankfurt, 21 June 2012Optimization - approach − Efficiency vs. optimization High volume − Move to shared service center approach or Cloud − Integrate with order management to increase integrity and visibility of STP − Try to bundle volumes (within group) continuous Middle volume − Move to Cloud improvement of data quality and − Move to Business Process Outsourcing interfaces − Keep reconciliation as simple as possible Low volume − Move to Cloud − Move entire operations to CloudSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 15
    16. 16. Frankfurt, 21 June 2012How to contact us Richard F. Zbinden Software for Corporate Leaders LLC Grienbachstrasse 38 CH-6300 Zug Switzerland phone +41 (0)41 761 97 90, fax +41 (0)41 761 97 94 email: rzbinden@complex-issues.chSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 16
    17. 17. Frankfurt, 21 June 2012Backup slidesSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 17
    18. 18. Frankfurt, 21 June 2012Requirements for usage in other business domainss The recurring need to compare data integrity between two or more sourcess The control of integritys The need for exception managements The need for escalations StatisticsSoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 18
    19. 19. Frankfurt, 21 June 2012Potential areas of reconciliation Retail and Private Banking Pattern Communication Capturing Interpretation Application Fulfilment Recognition /Feedback 1. Client 3. Client 6. Discr. 8. Procure- data profiling 5. Clients Portfolio ment Demand financial Management planning 10. 11. Client − Processing reporting Supply Governance 7. Non- 9. Limit 2. Market 4. Research process discretionary monitoring data AdvisorySoftware for Corporate Leaders LLC © Richard F. Zbinden - Not to be used or reproduced without written permission 19

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