16 September - SRE
How we apply the defence in depth concept for red team engagements
Ubirajara Aguiar Jr., Information Security Specialist
4 mins read
With the increasing adoption of instant payments, mobile banking and digital wallets, a major volume of retail transactions is shifting from batch mode to real-time. Financial institutions must be able to track the money in real-time as it traverses across their customer’s accounts and their internal and external settlement accounts.
Reconciliation in financial systems is the process of comparing two sets of records to check that the numbers agree. There are several types of reconciliation in the payment’s ecosystem to suit the needs of various actors:
Historically, reconciliations have been managed within an organisation by a team of people using spreadsheets, rulers, highlighters and by manually keying in a lot of entries. This process worked when payments were more batch-oriented, and the number of payment instruments and customer touchpoints was smaller.
Over the years, many financial institutions have been automating parts of their reconciliation processes using specialist reconciliation software that supports a variety of data input formats and custom matching rules. The software allows back-office reconciliation teams to run their recon processes easily and detect any mismatches. These jobs could either be scheduled to run at specific times of the day or invoked manually.
Legacy core banking systems could only provide data in batch typically at the end of the day, meeting the needs of batch reconciliation processes. That is, however, not enough in the new digital era.
The requirements of modern banking have long shifted from that of a mere reconciliation to transaction lifecycle monitoring, which requires tracking a payment from the time a customer requests it via a channel, to validation, funds check and accounting and to the payment reaching the beneficiary and eventual settlement. In a world where financial institutions are benefitting from the adoption of PaaS, BaaS and SaaS solutions, monitoring and reconciliation become even more critical as the payment information is now traversing across multiple touchpoints and infrastructure. All of this requires the applications processing these payments to be able to provide real-time events and notifications that can be achieved by a real-time reconciliation solution.
Core banking platforms are one of the critical elements in the payments value chain as the main accounting entries against the customer’s account happens here, thereby affecting their balance, which is a significant event. Modern cloud-native core banking platforms like Pismo are built with the inherent ability to stream such significant payment events in real-time for the consumption of their customer’s IT platforms.
These events can be consumed by our clients in the cloud using cloud-native integration such as AWS SNS/SQS, Google Pub/Sub or via Webhooks for ingestion into their on-premises reconciliation software allowing near real-time recs to be performed.
With automated matching rules that are event-driven, and with alerting mechanisms in place the job of the reconciliation team would become much easier as transactions can now be monitored in near-real-time and any mismatches or breaks in the recs can be investigated faster.
This would allow outdated and labour-intensive reconciliation processes to be replaced with an IT-led automated solution that would allow organisations to improve not just their matching rates but also introduce some colleague delight!
It’s time to throw away those highlighters!
Read more — a technical article about real-time events:
From batch jobs to an event-driven model
Photo: Nattapong Punna