As Fifth Third Bank grew, its decentralized, manual reconciliation process didn’t meet the bank’s high standards for efficiency, accuracy and data transparency. An expert was hired to drive automation of the reconciliation process, and the expert turned to Frontier™ Reconciliation from Fiserv.
Fifth Third Bank reconciled 98% of its balance sheet on Frontier Reconciliation and reallocated 125 full-time employees who had been performing manual reconciliations. The bank centralized reconciliations in one standardized system and reduced risk through segregation of duties and inability to alter data. They also gained enhanced visibility into reconciliation and exception management.
Ken Valentine, now Fifth Third Bank Vice President and Senior Group Manager, Information Technology, joined the bank in 2003 for the sole purpose of automating reconciliation. Fifth Third Bank places a high value on the visibility, control and time-savings that automation brings, and so does Valentine. He had previously worked for several years as a consultant helping banks implement accounting-related systems.
Valentine explained, “When a financial institution grows, it needs automation to reconcile accounts in an easily auditable, cost-effective way.”
In evaluating reconciliation solutions for Fifth Third Bank, Valentine chose Fiserv because of its solid reputation in financial services and for the partnership opportunity Fiserv offered. “I had a voice in creating the reconciliation solution,” he said. “I had a constant dialogue with Fiserv and other users. We would suggest enhancements based on our needs as well as regulatory changes. The people at Fiserv really listened to us.”
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio, and the parent company of Fifth Third Bank, an Ohio-chartered bank. As of March 31, 2019, Fifth Third had $168 billion in assets and operated 1,207 full-service banking centers and 2,559 ATMs with Fifth Third branding in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. In total, Fifth Third provides its customers with access to approximately 52,000 fee-free ATMs across the United States. Fifth Third operates four main businesses: commercial banking, branch banking, consumer lending and wealth & asset management. Fifth Third is among the largest money managers in the Midwest and, as of March 31, 2019, had $394 billion in assets under care.
“We have 98 percent of our balance sheet on Frontier Reconciliation.”
– Ken Valentine, Vice President and Senior Group Manager
Fifth Third Bank
The goal in implementing Frontier Reconciliation was to centralize and standardize the reconciliation process across Fifth Third Bank so reconciliations could be easily tracked in one place. “Reconciliations were done by four to five decentralized groups. But we wanted one primary system for standardizing reconciliations and improving visibility into data,” Valentine said.
The bank identified and included account reconciliations enterprise-wide, such as demand deposit accounts (DDA), general ledger, trust ledger and securities. The bank has since added checks and other payment types.
“We have 98 percent of our balance sheet on Frontier Reconciliation,” Valentine said. “There are 17,781 accounts being reconciled by 37 daily reconcilers (centralized) and 26 accounting reconcilers (month-end only). Automation enabled us to reallocate 125 full-time employees who had been doing reconciliations under the decentralized, manual process.”
With the segregation of duties within Frontier Reconciliation, users cannot manipulate data and results like they can in an Excel spreadsheet. This provides protection against fraud and misstatements.
“Auditors can see that all reconciliations are occurring, that the bank is doing true exception management and charge-off management. It verifies segregation of duties.,” Valentine said.
An enterprise reconciliation solution, Frontier Reconciliation forms a complete account reconciliation picture across the organization to make exceptions instantly visible and reduce or eliminate manual interventions.
Workflows fully automate labor-intensive processes and ensure compliance with corporate and regulatory controls. Frontier Reconciliation minimizes the risk of financial misstatement with transaction-level matching and a full audit trail, driving a faster and more accurate financial close.
Valentine challenges other financial institutions who are not automating reconciliation. “Ask yourselves why not automate? Why would a manual process be better than an automated process?'"
Valentine added, “If you’re using an automated solution like Frontier Reconciliation, you can be certain you have strong internal controls that meet regulatory requirements such as Sarbanes Oxley. With Frontier Reconciliation, Fifth Third has achieved incredible operational efficiencies.
“If you have any kind of appreciable volume, I don’t know how an organization can perform true exception management through manual reconciliation.
“If you’ve got hundreds of thousands of transactions per day, it’s a lot of work to load them all onto a spreadsheet, making sure to get the right balances, making sure you get everything matched up. I’ve got to believe the risk is high in those areas that are manual.”
With its widespread reconciliation usage throughout the bank, Fifth Third Bank has also leveraged Frontier Reconciliation beyond typical reconciliations.
A second instance of Frontier Reconciliation is used for the enterprise data warehouse. In conjunction with its profitability system, the bank captures all of the bank’s revenue into the enterprise data warehouse for reporting. There is a “quick reconciliation” to make sure general ledger and enterprise data warehouse match.
The bank also uses Frontier Reconciliation to do a fraud check when a Fifth Third bank check is presented for cashing at a banking center. The bank verifies that it is a valid bank check.
Another use of Frontier Reconciliation enables the bank to isolate potential fraud items associated with credit cards by separating the card activity depending on what happened at the transaction level (signature, PIN, manual PIN and so forth). This puts the activities in separate classes for follow-up research and handling, making exception management easier.
“When a financial institution grows, it needs automation to reconcile accounts in an easily auditable, cost-effective way.”
Ken Valentine, Vice President and Senior Group Manager
Fifth Third Bank