Evolving technology and a highly competitive market are pushing organizations to embrace advanced software systems to run their business and stay relevant against their competitors. Banks and financial institutes are no different to this phenomenon. The existing software & systems used for processing various business functions poses certain limitations as the business requirements evolve over time. For some software products they may be able to quickly upgrade to handle the changing requirements or need to be gradually being phased out in order to make way for a better system. Core systems are relatively difficult to replace compared to satellite systems mainly because of the involvement of huge volume of data. The core systems are already highly customized as per the business needs and also due to multiple interfaces with other systems. This system design and architecture become extremely humongous to manage which is a necessity to fulfill day-to-day business requirements. So, Migration projects becomes a critically important project by Banks and financial institutions,
While undertaking such a core migration project, business has to perform a lot of tasks. Some of these tasks are listed below:
While performing these tasks, invariably, Reconciliation activities gets lesser importance but which is one of the most critical tasks to ensure success for the project. It has been observed that in almost 90% of migration projects, planning is not done for reconciliation activity in advance.
The lower priority for this critical task causes stress in the system during the final stages of the project. The go/no-go decision for a migration project is also dependent on successful reconciliation which adds to the stress and leads to failure in most cases.
Reconciliation comes out as the biggest challenge in a migration project mainly because of the following reasons:
During a core migration project, the reconciliation needs to be performed between the source & destination data. That is double the volume of data that the core system handles. In the first stage, reconciliation is performed based on the reports generated from the source and destination system. A match in this stage is taken as a successful indication for the migration. But in 99% of the cases the first stage fails. In the second stage the data from source and destination are compared to find out the exact issues causing the mismatch. This is a tedious activity considering the volume of data from the two systems. Finally, the identified issues are resolved & reports are re-generated which is used for signing off the project.
The data from source and destination are provided as inputs in different formats – fixed length files, delimited files, database, reports etc. The data needs to be converted to a format that can be processed easily. The conversion jobs are created to handle such data. It also requires pre-validation on the data to ensure correct data is used for comparison.
Most business teams are dependent on spreadsheets to perform reconciliation. However, spreadsheet is a slow and non-reliable method of performing reconciliation. When the volume of data is huge, spreadsheets fail to process them and leads to lot of errors. Some organizations use database to handle the huge volume of data. But this involves creating queries which are technical and introduces dependence on IT teams.
Last but not the least, reconciliations in migration projects are time critical. The entire go/no-go decision is dependent on the outcome of this activity. Any error in this process leads to additional downtime and loss of business. Most migration projects have to roll back to older systems when the reconciliation fails. Hence the success of this process is most critical and should receive its due importance.
As per Gartner 83% of migration projects fail to achieve their target. This can be reduced to a great extent if banks plan their migration reconciliation in advance and identify the points of failure well before the actual migration. The reconciliation activity is a specialized task which requires a great understanding of the data and hence business plays the most critical role in this activity. But without the use of technology it becomes the most difficult task for any business to complete this activity with an acceptable outcome.
Having executed significant number of data migration projects in the past, Verinite understands the challenges involved in the reconciliation process and is in a better position to assist banks to fulfill this task as per their expectation. Please get in touch with us at firstname.lastname@example.org if you want to know more about our capabilities in this