CASE STUDY
Strengthening control and reducing operational risk
As part of a Finance Change programme AMP implemented TLM®
Reconciliations to automate complex inter-systems reconciliations,
increase match rates and drive down cost.
AMP is a leading regional wealth management
company with more than A$104 billion in assets
under management and 3.4 million customers in
Australia and New Zealand. The company offers
products and services covering retirement savings
and income, investments, superannuation (pensions),
financial planning, insurance and banking.
“Two years ago, we decided to reinvent the finance
function to take advantage of new technologies
and become best in class in all of our processes,”
said John Hardman, Finance Change Process
Executive, AMP. “Reducing costs, risks and improving
customer service were the main goals of the
change programme.”
A focus area of the programme was the reconciliation
function and the controls around it. Many of the
reconciliations at AMP were undertaken manually
through a plethora of processes that inevitably
added unnecessary risk and contributed to an
expensive cost base.
From a financial control standpoint, the benefits of
automation were obvious. Nic Broodryk, IT Manager,
AMP explained, “The business wanted to reconcile
all of its financial transactions within one working
day, but because of the manual processes, was only
achieving 50 percent of that target. This was not
acceptable.” By eradicating manual processes AMP
believed they could achieve their target, strengthen
their control and substantially reduce operational risk.
AMP, a long-standing SmartStream customer,
engaged the firm in a Proof of Concept that
reviewed process change, key integration points
and data management. The result of the evaluation
process was the selection of TLM Reconciliations,
a platform independent reconciliation system, used
for its ‘Generic’ functionality making it ideally
suited to manage the firms inter-systems
reconciliations between its general ledger and
product ledgers. AMP uses 17 different systems to
manage its business across its product lines all of
which required reconciling with the general ledger.
“The roll out of TLM Reconciliations across AMP’s
business has been phased, in order to spread the
business risk and to deliver benefits as early as
possible, we will have put the final phase of 200
balance sheet control accounts on to the system,”
says Hardman. “These attract around 150 different
data sources, which come in on a daily or weekly
basis. And in terms of transaction levels TLM
Reconciliations will be handling around 250,000
per day at AMP.”
A major part of the exercise, says Broodryk, has
been improving data sources. “In order to automate
the entire reconciliation process, we needed to
become smarter in the way we received data for
reconciliations. We had in the past been unable
to achieve high matching rates because we were
using less than ideal data in some cases.”
AMP
AMP is creating a volume insensitive
business – capable of scaling to support
the company’s continued growth
The final phase of implementation involved a
re-engineering of AMP’s accounting processes,
particularly how data is fed into the general ledger.
Broodryk says this was the most complex part of
the finance change programme and involved a huge
amount of testing. “Some of the bank reconciliations
are incredibly complex and reconciling bank
statements with our general ledger is a challenge.
SmartStream helped us to implement the matching
rules once the data came into TLM, enabling us to
bring this into line with the accounting systems.”
Working closely with AMP’s project team SmartStream’s
Professional Services were able to implement TLM
to allow AMP to have greater clarity and insight into
‘real’ exceptions rather than ‘perceived’ exceptions
which were simply caused by a delay in data. “An
inbuilt delay in bank reconciliations means that
when a transaction is raised within AMP, it is not
reflected on bank statements until the next day.
SmartStream were able to manage these transactions
within the system, to ensure that we were only
looking at genuine exceptions, rather than those
affected by the delay. The impact on customer
service and productivity is massive,” says Hardman.
By standardising accounting processes, AMP has
been able to significantly improve its matching
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rates, moving to 100 percent for some accounts.
“Our aim was to get standard processes for all of
the information coming into our general ledger.
As a result, if we can improve our matching rates,
it aids our business case because we can reduce
costs,” says Hardman.
Risk reduction has also been achieved. “As an
insurance company, if we can reconcile faster, we
don’t have to hold as much reserve capital to cover
risks. The TLM Reconciliation project is absolutely in
line with our business goals to be risk averse and to
protect the funds of our policyholders. If we can
reduce risk and costs because we are doing things
smarter and in a more automated way, we can pass
these benefits on to our customers and shareholders.
It all helps us to be more competitive,” says Hardman.
By automating its reconciliations process, AMP is
creating a volume insensitive business – capable of
scaling to support the company’s continued growth.
AMP will continue to roll out TLM Reconciliations to
support other reconciliations functions, focusing on
accounts that are high volume or high risk. In total,
the firm has over 1,500 balance sheet control
accounts and as Hardman puts it: “The sky is the
limit. We will be picking and choosing which
accounts to tackle next.”
SmartStream Technologies delivers operational
advantage to clients through enterprise-wide,
real-time Transaction Lifecycle Management
(TLM®) solutions that automate, track and
control financial transactions and processes
within and beyond the enterprise.
Built on SmartStream’s TLM Enterprise Control
Architecture, TLM solutions provide greater
transaction visibility to create exceptionsbased operations capable of automating
complex and high volume transaction flows.
Operational risk and cost is reduced, while
customer service levels are improved.
SmartStream is owned by Dubai International
Financial Centre (DIFC) and has global operations
supporting over 1,000 clients, including more
than 75 of the world’s top 100 banks.
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