Christian Nentwich, CEO and co-founder of Duco, says the reconciliation landscape today is behind the times and that large chunks of it are being done manually, sometimes by hundreds or thousands of staff at the bigger brokerage firms.
In some places there is too little reconciliation going on, and in others there is too much, he told John Lothian News at FIA Boca.
A few years ago, there was a big trend of outsourcing reconciliation to offshore locations, he said. But “sometimes its not happening at all, especially in things like interbook and intercompany trading activities,” he added.
For example, in brokerage invoicing – just one small part of the reconciliation landscape – there is more than $500 million in unreconciled fees.
His company, Duco, has come up with technology he believes can help.
“We asked ourselves what are the fundamental underlying issues we want to solve? We want people to be able to reconcile data, no matter what it is, and we want them to do it in a couple of hours, without running projects.”
Duco has cracked the challenge of how to take low quality data in arbitrary formats and enable “non-technical people” to find the items that do not match up in a very short period of time, he said.
Reconciliation touches every part of financial services, Nentwich said, so there is a lot of potential for progress for a firm just coming into the market. And it is important to look outside the financial world as well for potential ideas – for example, Duco is also working with a supermarket that issues prepaid cards.
Nentwich is optimistic that the solutions the industry is starting to see now, “where you can just switch on and solve a very focused problem” are going to become widespread, with no barriers to implementation.