Reconciliation to Grow Steadily

An increased repertoire of functionalities is bringing reconciliation systems out of the shadows of the back office and into the spotlight, according to TowerGroup, which expects double-digit growth in industry spending on securities reconciliation technologies through 2009. In a new report, "Reconciliation Technology: Advancing Beyond Cash and Securities Reconciliation," the Boston-based research and consulting firm predicts a compound annual growth rate of 10 percent in the reconciliation technology space, bringing industry spending to $280 million in three years, up from $212 million in 2006.

According to the report, this growth will be driven by investment management firms' desires to broaden their exception management capabilities, improve operational efficiencies through proactive process improvement, reduce trade-related risk and increase the agility of their staffs. Further pushing the growth of reconciliation technology, says TowerGroup, is the current regulatory environment, which constantly challenges firms to improve internal processes and the accuracy of records, and maintain an air-tight audit trail.

Technological advances in vendor solutions are enabling investment management firms to expand the scope of automated reconciliation beyond cash and securities to more-complex data sets, TowerGroup notes. Firms now are utilizing reconciliation systems to support reconciling internal subsystems, match orders and confirmations, and compare security identifiers, the report explains. <<<