Bank Reconciliation Through Robotics

giant robot man holding small bank building
Why Automate?

Bank reconciliation has always been a difficult job. Modern-day technology plays an important role in lessening the burden that accountants carry when working on a bank reconciliation. No matter how big or small the operations, financial organizations have to spend a great deal of time just to organize their work.

It is a difficult task to manually match transactions, prepare journals and post them before bank reconciliation can even be attempted. One small error caused by a wandering mind or slip in concentration, and the whole operation is a lost cause. Such a slip means hours of work are wasted and added to this is the burden of doing this repetitive job once again from the beginning!

Apart from the man-hours that are wasted, there is the fear of losing a client when his work is not completed as per schedule. Fortunately, RPA has now taken on the burden of soul-killing repetitive work.

RPA: Ruth Ruman’s Savior!

Ruth Ruman ran a small financial institution with limited resources and staff. She was always behind time with her commitments. This caused her to lose clients and make her reputation suffered. That was not the end of her problems. Losing clients and reputation led to a fall in income. Her problems were further compounded by the foreclosure of her mortgage. Losing a home that she had set up with so much love and effort, almost broke her resolve to work. But, she was not ready to give up. She ran into Steve, an old college mate, a well-settled retailer today. Together they analyzed in depth what was wrong with her method of working which caused so much havoc in her life.

7 Common Challenges In Bank Reconciliation

Ruth and Steve found the following problems in her bank reconciliation work. These problems are actually universal.

  1. There are anomalies in checking and matching transactions which are done manually by staff. This leads to massive losses both in terms of money and man-hours when they were not detected. Clients who suffered from this problem withdrew their portfolio. When this gets detected and pointed out, it also causes a lot of friction between the boss and the staff, which sometimes leads to attrition. Companies lose some good workers due to this.
  2. The next problem is preparing and posting journals. This has major repercussions on bank reconciliation work. There are glaring mistakes in this area which create hurdles in the successful reconciliation of bank work.
  3. No matter where the organization was situated and what the size of the organization, these problems were faced by one and all. Organizations of mid-size have a more difficult time because they have to deal with a variety of account types and time zones. This often leads to anomalies and incorrect posting of date and time.
  4. Different kinds of payment added to the complexity of bank reconciliations.
  5. Sometimes the same entry is made twice and even thrice. Overworked and bored staff often make mistakes like these. When transactions carried out in different zones have to be posted and there are errors in posting the correct time and date, it leads to mistakes in the entire job.
  6. The difference in a time of transaction and the local time also causes similar problems. This problem arises especially when the staff member is not conversant with the difference such a posting would make to the document.
  7. Much confusion is caused because of the different ways of writing the date. Even small errors like an extra comma or letter which creep into the document unknowingly, play a major role in losing a client.

Companies try to resolve most of these problems in the traditional manner such as manual data cleansing and forced data transformation to ensure that all the entries follow a certain format. But these methods fail to yield the desired results.

When they had done a detailed analysis of the shortcomings in Ruth’s establishment, they set about finding the solution.

Then it was Steve who guided her towards Robotic Process Automation. He told Ruth that the most effective way to solve the problems of bank reconciliation is to implement Robotic Process Automation.

He reminded Ruth that:

“Automation is cost-cutting by tightening the corners and not cutting them.” – Haresh Sippy

How RPA works in Bank Reconciliation Process?

If the work is on a very small scale, Excel can help with bank reconciliation. But it is not a comfortable process for many employees. When Robotic Process Automation steps in any number of problems are solved in one stroke and things become all round.

RPA uses artificial intelligence and machine learning to evaluate data. When these two combine, huge amounts of data, no matter how complicated, are resolved accurately and quickly. The problem-solving capability of RPA is manifold as compared to human beings if they are correctly handled. It does not get bored or tired like humans, no matter how much data, so there is no room for errors of any kind.

RPA extracts data that is useful from the huge amount that is fed into it and gets you the relevant information. The data fed may be of different types such as bank data files or register data files. RPA checks all such data and speedily finds any anomalies and irons out the problems.

It also matches transaction entries and finds out the entries that do not match and identifies what needs to be done. Generally, it means reconciling terms, mending errors and getting approvals. When the entries are okayed, these entries are finalized and no more updates are accepted.

Advantages of RPA reconciliation

There are a number of advantages when bank reconciliation is done in this manner.

● RPA renders cent percent accuracy. All records are correctly matched and there are almost no exceptions.

● RPA is easy to install and it is easy for the user to operate it.

● The staff is happy to learn how to operate it because it takes away the tediousness of their work.

● The management is zealous to install RPA because of its accuracy. It is possible to deliver to clients on time, a document that is almost error-free.

● And above all much time is saved and there are no frowning faces to vitiate the office atmosphere.


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About the Author
Kapil RANA is the promoter and Chairman at HostBooks, Inc. a FinTech company based in California. He is a qualified CPA (Ireland), Fellow Chartered Accountant (India), and continues to dedicate his life to learning and sparking the fire of knowledge.
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