The payments industry is in the midst of a transformation. Transaction volumes are surging, margins are tightening and the middle and back office is now emerging as a critical differentiator for firms looking to stay competitive. For too long, it was treated as a cost center to be managed rather than optimized.
At Money20/20 this year, AutoRek’s VP of Payments and Retail Banking, Nick Botha, sat down with Financial IT to discuss what’s driving this shift and why reconciliation deserves far more attention from payments executives than it typically receives.
The Hidden Profitability Lever
For most payments firms, growth conversations center on acquiring new customers, expanding into new markets or launching new products. Fewer firms are having honest conversations about what happens after a transaction is processed. That operational machinery ensures money moves accurately, exceptions get resolved and books close on time.
Yet the numbers tell a compelling story. Consider the operational cost per transaction. This is the total expense a firm incurs to process, reconcile and report on each payment flowing through its systems. For firms relying on manual processes and fragmented legacy tools, this cost climbs as transaction volumes grow. More volume means more headcount, more spreadsheets and more reconciliation breaks to investigate manually.
For firms that have invested in automation and efficient reconciliation infrastructure, the opposite happens. The operational cost per transaction falls as volume scales because the incremental cost of processing an additional transaction approaches zero. The same team, supported by intelligent automation, can handle significantly higher volumes without proportional increases in cost or risk.
This is not marginal optimization. It is the difference between a firm that becomes more profitable as it grows and one that watches its margins erode with every new customer onboarded.
Reconciliation as Strategic Intelligence
The value of modern reconciliation extends beyond matching transactions. When firms achieve granular visibility into their reconciliation picture, they unlock strategic intelligence that informs decisions across the business. They understand not just what matched but why certain transactions failed, where delays occur and how different geographies or payment rails perform.
Which acquiring partners deliver consistent settlement accuracy? Which merchant segments generate the most exceptions? Where are operational bottlenecks creating unnecessary float or liquidity pressure? Spreadsheets and manual processes cannot answer these questions. They require a platform capable of ingesting high volumes of disparate data, normalizing formats across payment rails and APMs and surfacing real-time insights that operations teams can act on.
For global enterprises operating across multiple geographies and payment schemes, this visibility becomes even more critical. The ability to benchmark performance across regions, spot underperforming corridors and proactively address issues before they escalate into regulatory or customer-facing problems represents a genuine competitive advantage.
The Case for Purposeful AI
Artificial Intelligence dominated industry conversations at Money20/20. Announcements of new AI models and capabilities appeared daily. But there is a meaningful distinction between adopting AI as a marketing exercise and deploying AI that is genuinely fit for purpose within critical financial controls.
AutoRek deliberately has taken a measured approach to AI, investing significant time and resources to ensure that any intelligence introduced into its platform meets the rigorous standards financial services demands. Reconciliation sits at the heart of a firm’s financial controls framework. It is not an area where firms can afford to experiment with unproven technology or deploy generic AI agents without careful consideration of accuracy, auditability and regulatory compliance.
This means working with the right partners, obtaining the necessary certifications and building AI capabilities specifically designed for the reconciliation use case. These are not capabilities repurposed from other domains. The goal is not to replace human judgment but to augment it. That means automating the mundane, surfacing the exceptions that require attention and freeing skilled professionals to focus on investigation and process improvement rather than data wrangling.
AutoRek’s AI solution, AutoRek ARIA, represents this philosophy in practice. Currently being piloted with select clients, AutoRek ARIA is designed to operate within the financial controls framework. It delivers speed and accuracy improvements while maintaining the governance and transparency that regulators and internal audit teams require.
Staying Relevant in a Rapidly Evolving Market
The payments landscape continues to shift. Stablecoins, blockchain-based settlement, instant payment schemes and evolving regulatory requirements around safeguarding and operational resilience are all reshaping how firms think about their technology investments.
Firms that have built their operations on rigid legacy infrastructure will find it increasingly difficult to adapt. Those that have invested in configurable, scalable platforms will be better positioned to respond to whatever comes next. These platforms can handle new data formats, new payment rails and new regulatory reporting requirements without wholesale re-implementation.
The middle and back office can no longer be neglected while front-office innovation captures executive attention. It is the foundation upon which sustainable, profitable growth gets built. And for firms willing to invest in getting it right, the returns in efficiency, risk reduction and strategic agility are substantial.