According to the report, financial firms are outsourcing reconciliation functions (both technology and operations labor) to create standardized risk management processes, increase their ability to enter new markets and comply with more complex regulations, while significantly reducing costs and risks.
Financial firms are also seen as recognizing the value of developing an enterprise reconciliation outsourcing strategy in order to increase transparency of business activity in the wake of ongoing regulatory pressures, the report says.
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According to the report, one of the ways the firms are handling these stresses is by creating standardized, real-time reconciliation processes to ensure their books and records are fully balanced.
Mike Alexander, executive vice president and COO, Business Process Outsourcing, Broadridge said, "Centralized reconciliation outsourcing represents a paradigm shift for the industry. Historically, financial firms spend 30-40% of back office costs gathering and preparing information as part of disconnected reconciliation processes. Firms partnering with an industry reconciliation leader, providing both BPO and technology, can leverage global centers of excellence to create standardized risk management processes."
The four key factors that are cited to be driving the financial firms to rethink their current reconciliation processes are increased and more complex regulations such as Basel III and Dodd-Frank, pressures on optimizing firm capital, cost of multiple IT applications and inconsistent business processes and challenges of managing global and product expansion in a real-time manner.
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By GlobalData
