While the asset management industry has shown steady growth in recent years, market volatility continues to put pressure on profitability. And as recent history has shown, volatility is not the only factor that can roil the market and unsettle its participants. The subprime debt crisis and resulting credit crunch, the growing federal budget deficit, and the undeniable slowdown in the economy have all contributed to uncertainty in the financial markets. Asset managers cannot control the ups and downs of the markets or the external factors that impact them. What they can control are their own operating costs. In fact, increased operational efficiency is a firm's best hedge against marketplace volatility and its impact on revenue and profitability. A period of uncertainty is the time when many firms examine their operations for opportunities to eliminate inefficiencies and reduce their exposure.
One effective way to accomplish these goals is through a combination of automation of processes and the implementation of best practices in workflow. And, at many firms, the area most ripe for improved productivity is reconciliation–an often overlooked back office function that offers relatively easy wins in the quest for greater efficiency and profitability. Plucking this low hanging fruit today is one obvious way to position your firm to prosper in whatever market conditions the future may hold.
This document explains why automated reconciliation is quickly evolving into a competitive necessity. It then details the costs and risks associated with manual reconciliation, the benefits you can expect from automation, and the best reconciliation workflow model. It also outlines a 10-point checklist on optimizing efficiency in reconciliation and weighs the pros and cons of alternative solutions-in house, third party, or web hosted. As you will see, the decision to automate reconciliation presents both a challenge and an opportunity for firms: a challenge to stay competitive and an opportunity to make dramatic improvements in efficiency and client service.
