FSS Reconciliation Suite

Rapid digitization in the banking sector has created so many digital channels like ATMs, POS, Kiosks, Mobile and Internet, through which banking services are rendered. Given so many channels through which payment transactions are done, accurate, effective and efficient account reconciliation across is extremely important. The reconciliation process ensures that the data available in the bank’s system is valid and accurate. Reconciliation of banking transactions also helps in identifying bank errors and detecting frauds. Banks also do perform reconciliation activities to ensure the relevant fees and charges are tracked for the applicable transactions.

However, despite all technological advances particularly in the Indian sub-continent that make real time payments like IMPS (Immediate Payments), Common QR Code based payments, UPI (Unified Payments), BHIM (Bharath Interface for Money) using UPI, Aadhaar Pay (Biometric and Unique Citizen Id based payments), etc. within reach of common man, transaction reconciliation remains a post facto process. While the process does help in identifying and settling the exceptions, this is usually done on the next day., at the earliest. The customer usually must wait for 3 to 4 days to get a refund in case of any network or transaction issues. So, in effect, a transaction that should have been completed instantly (in few seconds) took 3 to 4 days to get refunded.

Even from a bank’s perspective, per estimates, a typical finance team in a bank spends about 50 to 100 working days per month in reconciling and settling differences for transactions., which means there must be a reconciliation team in every department of a bank. Imagine the man hours required in the overall payment ecosystem for reconciling transactions!

Even after all this, frauds still occur and might increase with the new digital push in payments.

Is there a Better Way?

One thought process to resolve such issues and pain points can be to handle the exceptions by having a ‘single source of truth’ system which can correctly identify and process transactions leading to appropriate settlements. A system which will make the process of matching data from multiple systems redundant as the identification can be done at a single system making it the single source of truth.

Such a system will provide multiple benefits to stakeholders

1. Real time identification of exceptions and issues leading to instant settlement and refunds.
2. Customer can get confirmation of credit to the beneficiary.
3. In case of unsuccessful transactions, the refunds are done in real time leading to enhanced customer experience.
4. Sharp drop in number of disputes arising due to late presentment and/or time required in refunds.
5. Direct benefit to banks, as the time and efforts saved from not handling reconciliation and settlements can be used to perform actual banking and financial tasks.
6. Avoidance of costly errors in case manual reconciliation and settlements.
7. Biggest advantage would be minimalizing fraud scenarios in which an Anti – Fraud and AML applications can be installed in a single system which can track every transaction irrespective of the number of hops it takes.

Adapting to newer technologies

With the introduction of new technologies like blockchain, tokenization, ISO 20022 messaging standards, etc. it has become possible to visualize a payment ecosystem which is self-reconciling in real time.

Imagine a payment network with single standardized Real Time Recon System which is connected to Issuers, Processors and Acquirers.

Any transaction initiated by Issuer gets logged in the Recon system in real time, the processor and acquirer in turn log the incoming transactions into the same system. If the acquirer logs in a successful transaction in the expected time, the transaction is said to be auto-reconciled. If not, Recon application initiates a reversal at the source (and intermediates, if required).

A reversal is also initiated at the destination system to auto-reverse any late incoming transactions. Recon system can even control various payment scenarios including Frauds using advanced algorithms to instantly reverse any suspicious transactions (at Processor stage itself) even if they have been done using correct credentials which might have been collected using phishing attacks.

FSS is uniquely positioned to take advantage of such new age technologies and concepts being the leader in Indian Payments to provide next generation faster and secure payments experience in India.

For more information on next generation reconciliation solutions, please write to FSS Marketing team: products@fss.co.in