Blockchain can solve internal reconciliation problems in the capital market

Crazy Comment : More than half of companies have experienced transaction errors caused by data transmission and synchronization problems between different systems. However, blockchain technology can provide an unalterable data source and automate the entire reconciliation process, which can reduce personnel and system costs, improve efficiency, and reduce the risk of transactions or errors.

Translation: Nicole

More than 50% of companies experience transaction errors caused by misalignment of cash data between different systems.

Blockchain technology can help solve the large amount of unresolved data reconciliation problems between systems among enterprises.

Based on a new TABB Group study: “Internal Reconciliation: The Dirty Little Secret of Capital Markets”, the reports detail the internal reconciliation processes at financial services firms and discuss the potential for disruptive distributed ledgers.

The report's author, TABB senior analyst Dayle Scher, explains that the capital markets industry has a large amount of internal reconciliation data, which is due to the inadequate transmission and synchronization of duplicate data between platforms. The resulting discrepancies can lead to errors in transactions, pre-trade compliance checks, client and regulatory reporting, analytical calculations and securities and fund pricing. More than 50% of the 150 companies surveyed have experienced transaction errors caused by misplacement and cash data between different systems. And two-thirds of the companies believe that this is caused by inefficient reconciliation processes between systems.

The report details how the inefficiency of internal reconciliation is difficult to resolve because, in most cases, reconciliation issues are not addressed at the corporate level. Data reconciliation is often handled by individual business units, with each department resolving errors independently. TABB believes that there could be an internal enterprise-wide private blockchain as a solution to replace the traditional data architecture, although privacy and permission issues between departments would require integration.

Dayle Scher

Scher said:

“An immutable source of data, enabled by distributed ledger technology, can significantly reduce the need for multiple internal reconciliations, while also reducing the risk of transaction or reporting errors. If the reconciliation process is reduced or completely eliminated using a private blockchain solution, the overall cost of personnel and systems can be greatly reduced.”