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• 3-way reconciliation
  A matching process in which data is validated based on three separate data sources. For example, a situation where matching is performed based on Ledger entries, Bank Statement entries, and client specific data.

 

A

• Account Information Service Provider (AISP)
  A very popular term in Open Banking, an Account Information Service Provider (AISP) provides third-party access to account information with the customers’ consent. AISPs help customers reduce manual work by offering quick access to their financial information, savings, and approval of loans.

 

• Account Reconciliations
  A reconciliation process in which specific accounts are compared against other data sets (for example, external data sets) to ensure that they are being recorded accurately.

 

• Accounts Payable
  An account that tracks payments that are leaving an organization, for example, to suppliers or vendors.

 

• Accounts Receivable
  An account that tracks payments that are incoming to an organization, for example, from customers.

 

• ACH
  ACH stands for Automated Clearing House and is typically used in respect to payments made by banks with the respective Central Bank acting as a central clearing house. Typically, there may be limits in the size of payment allowed per type of ACH payments, and settlement timelines may vary inclusive of market cut off times.

 

• Acquirer
  An acquirer is an organization that provides the means of allowing a company to accept electronic payments through one of the electronic payment schemes/networks such as Visa or Mastercard. This typically includes managing the relationship with the networks and other operational tasks.

 

• Adjustment Entry
  A type of journal entry made to correct and/or amend a previous inaccurate journal entry, based on a reconciliation process.

 

• Advanced Encryption Standard (AES)
  The Advanced Encryption Standard (AES) is one of the most secure encryption algorithms available. The symmetric-key block algorithm is the FinTech industry standard to encrypt and decrypt classified data.

 

• API
  API (Application Programming Interface) is an intermediary that enables two applications to communicate. APIs are a set of protocols that allows the creation of applications that access data and features of other services.

 

• Audit Trail
  A record of a series of actions and activities that have impacted a specific data entry.

 

• Automation
  The use of technology, often including robotics and AI, to perform repetitive tasks, such as data matching and reporting, with minimal human intervention.

 

• Automated Reconciliation
  The process of using dedicated reconciliation software to perform matching tasks with no manual intervention.

 

B

• Back Office
  The branch of a financial firm that is responsible for operational processes, such as settlements, clearing record keeping and reconciliations.

 

• Balance Sheet Reconciliation
  A reconciliation process in which entries on a balance sheet are compared against supporting data to ensure they are being recorded accurately.

 

• Bank Fees
  Bank fees are commission charges that are levied for various banking services. In the context of reconciliations, these may be needed to be accounted for in transaction matching.

 

• Bank Reconciliation
  A reconciliation process in which cash balances are compared against bank statements to ensure they are being recorded accurately.

 

• Bank Statement
  A snapshot of the balance of a bank account generated at a given time period for a given time period (for example, a month).

 

• Blockchain
  Blockchain is a distributed ledger technology that facilitates the process of recording transactions and tracking assets in a business network. Futuristic and versatile, blockchain powers cryptocurrencies, smart contracts, healthcare, supply chain, and energy trading, among several other use cases.

 

• Break
  Similar to a mismatch.

 

• Broker/Dealer
  Broker/Dealers are organizations that act as both a broker, i.e., arranging securities trades on behalf of underlying clients, and a dealer, i.e., conducting securities trades for their own proprietary financial gain.

 

• Buy Side Firm
  Organizations who buy securities with the intention of making money from investments on behalf of themselves or underlying customers. Examples might include Asset Managers, Wealth Managers, Pension Funds, Insurance Firms, and so on.

 

C

• Card Not Present (CNP) Transactions
  Card-not-present (CNP) are the transactions that are processed without the cardholder and the card not physically present at POS. These transactions are facilitated virtually or by mobile wallets by entering the card details with a security code.

 

• Card on File transactions
  Card on File or Subscription transactions are the stored card credentials available with a Merchant, Payment Gateway, or Aggregator. Used for future transactions, the card on file will have all the relevant details stored in the encrypted format except its CVV. A customer’s explicit consent is needed to store the card details.

 

• Case management
  The process of tracking, investigating, and resolving breaks/mismatches/exceptions by organizing them as cases/tickets and assigning them to teams or individuals for resolution.

 

• CASS
  In the UK, CASS refers to the Client Asset Sourcebook, a list of rules and regulations on client money, custody, reconciliation, and reporting, which broadly follow the principle that customer and firm funds and assets should be segregated in order to prevent co-mingling to allow for swift access in a liquidity or solvency event as was seen in the 2008 crisis.

 

• Charge cards
  Charge cards are electronic credit cards by which the cardholder can make purchases that the card issuer pays. These cards have no spending limits and interests, but the cardholder is entitled to repay the debt within the due date.

 

• Chargeback
  A chargeback is the refund amount returned to the cardholder for a dispute raised by him. It is a consumer protection tool and the easiest way for cardholders to request payment reversal from the issuing bank.

 

• Clearing
  Clearing is the process of validating and matching of a transaction/trade which will allow for settlement once executed. Typically this is a process in which both sides of the trade/transactions ensure that they are exchanging information in the correct format and with accurate information. This can either be done directly with each other, or through a central counterparty such as an exchange or a central bank.

 

• Closing Balance
  The balance of an account at the end of a trading day.

 

• Cloud Hosting
  Cloud hosting is where through a pooled server resource in a data center, software, applications, and websites are able to be hosted without the reliance for a single server. Customers are therefore able to benefit from scale advantages as well as outsource costs (for example security and maintenance). Some of the most well-known cloud hosting providers are Microsoft Azure, Amazon Web Services, and Google Cloud.

 

• Compliance
  The adherence to legal, regulatory, and internal rules and policies. In a financial context, this often relates to regulations set by bodies such as the FCA.

 

• Contra-Reconciliation
  A matching process in which an entry is used to offset a transaction in order to clear a break/mismatch/exception.

 

• Core Banking System
  A core banking system is a back end software platform that is designed to process and manage a bank and/or financial institution’s core operations, such as deposits, withdrawals, interest accruals, and so on.

 

• Core wallet
  The ability to contain the whole blockchain instead of just a piece of it.

 

• Credit Entry
  A transaction that indicates that an account is due to be debited. This should usually be reconciled against a corresponding credit entry.

 

• Cross Currency Reconciliation
  A matching process in which FX rates can be built into matching rules to allow for automatic reconciliation between transactions in different currency types.

 

• Cross-border payments
  Cross-border payments include wholesale, retail, or recurring transactions involving individuals, banks, companies, etc., in which the payee and the recipient operate from different countries.

 

• Currency Mismatches
  A break/mismatch/exception caused by transaction data that has been sent for reconciliation in separate currency types.

 

• CUSIP/SEDOL/ISIN Mismatches
  A break/mismatch/exception caused by trade identifier information that is incorrect on either the ledger or statement side.

 

D

• Dashboard Reporting
  A visual representation/interface displaying metrics and statuses of reconciliations and their results for high-level monitoring and management reporting.

 

• Data Aggregation
  The process of collecting and compiling information from various systems and data sources into a single, unified view for analysis and reconciliation.

 

• Data Agnostic
  The concept of a software that is compatible with any type of data input, regardless of file type, data structure, or volume.

 

• Data Lake
  A large repository of data made up of data from various sources and inputs in their raw format within an organization, allowing for a centralization of information.

 

• Data Orchestration
  The process of automating the management and coordination of data flow from between disparate inputs and outputs, including the transformation of data when required.

 

• Data Transformation
  Data Transformation refers to the process in which data files and/or formats are enhanced and/or augmented without the underlying integrity of the data changing. The purpose of this is to make raw data useful for specific pre-determined purposes.

 

• Data Warehouse
  A large repository of data made up of data from various sources and inputs within an organization, allowing for a centralization of information.

 

• Debit Entry
  A transaction that indicates that an account is due to be credited. This should usually be reconciled against a corresponding debit entry.

 

• Decentralized Finance
  Decentralized Finance (DeFi) is a blockchain-based system making products and services available on a decentralized public network. DeFi enables transparent transactions using peer-to-peer interaction by a software-based mediator.

 

• Digital credit
  Digital credit refers to loans accessed through a digital channel, via a mobile device, or a third-party agent. It is an emerging way of accessing electronic money with backend customer evaluation and automated customer interactions.

 

• Duplicate Entries
  A break/mismatch/exception caused by data that has been entered for reconciliation more than once, meaning it cannot match.

 

E

• Embedded credit
  Embedded credit involves using a familiar interface that allows the customer to apply, acquire and repay loans within the platform, avoiding the need for a third-party site.

 

• Embedded Finance
  Embedded finance enables customer-facing non-financial platforms to offer financial services. Customers can access in-app, contextual financial offerings via apps and services right at the point of sale.

 

• Embedded lending
  Embedded lending integrates Lending-as-a-Feature in digital platforms. Companies work with FinTechs to offer credit as an in-app experience to increase LTV (Lifetime Value) of customers and average order value.

 

• e-Money
  Electronic money is a form of currency used for electronic transactions by storing in banking computer systems, digital databases, etc. These are highly accessible in international transactions and are backed by a central authority as fiat currency.

 

• e-Wallet
  A digital wallet securely stores users’ payment information, passwords for numerous payment methods and websites on an electronic device. This software-based e-wallet system enables users to purchase and transact easily.

 

• Exception
  Similar to a mismatch.

 

• Exception Handling
  The process of identifying, investigating, and resolving discrepancies or ‘exceptions’ that arise during a reconciliation process.

 

• Exchange
  A central venue where parties are able to buy and sell financial instruments based on prevailing market prices which are driven by the supply and demand for each security.

 

• External Audit
  The examination and verification of accuracy of financial information as performed by an independent party.

 

F

• Finance
  Finance refers to the full set of processes that underpin the financial accounting and reporting for a business.

 

• Financial Accounting
  The systematic process of recording all financial transactions that occur within an organization.

 

• Financial Controller
  A senior member of the financial department that is responsible for internal controls and reporting accuracy.

 

• Financial Reporting
  The amalgamated output of financial accounting typically in the form of a balance sheet, profit and loss statement, and cash flow statement over a set period of time.

 

• Front Office
  The branch of a financial firm that is directly responsible for revenue generation, for example, trading and sales.

 

G

• General Ledger
  A central repository that is used to record every trade/transaction made and serves as the golden source for financial and regulatory reporting.

 

H

• Hedge Fund
  A private investment fund that uses a variety of complex strategies, including leveraging and short-selling, to generate high returns for its wealthy investors.

 

I

• Infrastructure as a service (IaaS)
  Infrastructure as a Service (IaaS) refers to a cloud computing service where businesses rent or lease servers for computing, storage, and networking instead of a traditional data center. IaaS gives its customers access to servers in locations close to their end-users and eliminates the need for physical servers.

 

• Insurance Firm
  An organization that provides risk management services by paying out compensation based on a risk event occurring. These are paid for by collecting regular premiums which are in turn invested. Common examples include car insurance, life insurance, medical insurance, business insurance, and so on.

 

• Intercompany Reconciliation
  A reconciliation process in which data sets from entities within the same parent organization are compared to ensure accurate recording.

 

• Interest Income
  Interest income are payments made by banks in return for holding deposits in their accounts, or for payments made on top of the principle on loans and credit. In the context of reconciliations, these may be needed to be accounted for in transaction matching.

 

• Internal Audit
  The independent examination and review of internal operations and processes.

 

• Internal Controls
  Organization-specific procedures and policies implemented to ensure compliance and operational efficiency while minimizing risk.

 

• Intra-Day Balance
  The balance of an account as a snapshot during a trading day.

 

• Investigation
  The process of inquiry and resolution into a break/mismatch/exception.

 

• Investment Bank
  A licensed institution that helps corporations and governments raise capital through the buying and selling of equity and debt such as shares and bonds. They typically also offer advisory services on mergers and acquisitions also.

 

• ISO20022
  ISO20022 is a global standardization of financial messaging with the aim of creating a common, rich data format using XML and JSON syntax.

 

• Issuer
  An issuer is an organization that provides the means of making an electronic payment through one of the electronic payment schemes/networks such as Visa or Mastercard. A common example would be a credit or debit card.

 

J

• Journal Entry
  A record posted to a general ledger that demonstrates the credit and debit of specific accounts based on a specific transaction.

 

K

• Know Your Customer (KYC)
  A due diligence process used by financial institutions to verify the identity of their clients and assess potential risks of illegal intentions for the business relationship.

 

L

• Ledger Break
  A break/mismatch/exception that is caused by incorrect or missing data from the ledger side of a transaction.

 

M

• Manual Matching
  The process of identifying a match that has not been automated based on pre-determined match rules.

 

• Manual Reconciliation
  The process of performing matching tasks with no/inadequate assistance from dedicated software, for example, via a spreadsheet.

 

• Many to Many Reconciliation
  A matching process in which multiple transactions are reconciled against multiple corresponding transactions. For example, four statement entry transactions of £25 versus two ledger entry transactions of £50.

 

• Many to One Reconciliation
  A matching process in which a single transaction is reconciled against multiple corresponding transactions. For example, a statement entry transaction of £100 versus two ledger entry transactions of £50.

 

• Match
  When a reconciliation between two or more data sets is confirmed not to contain conflicting information and is accurate.

 

• Match Field
  The specific data field within a data set that is being compared for reconciliation.

 

• Match Rule
  The logic that the reconciliation process follows in order to ensure the data sets match.

 

• Matching Process
  The process of reconciling two or more data sets based on match rules to identify items that can be reconciled and that cannot be reconciled.

 

• Middle Office
  The branch of a financial firm that sits between the front office and the back office, typically responsible for P&L reporting, trade processing, and compliance.

 

• MIFID II
  MIFID II stands for the Markets in Financial Instruments Directive II and requires firms in the EU to ensure the accurate and timely reconciling and reporting of their trading, both pre and post trade.

 

• Mismatch
  When a reconciliation between two or more data sets contains conflicting or missing information.

 

• Missing Data Mismatches
  A break/mismatch/exception caused by missing corresponding data.

 

N

• Net Income
  The total profit a business earns after all expenses, taxes, and costs have been subtracted from its total revenue. It’s often referred to as “the bottom line.”

 

O

• One to Many Reconciliation
  A matching process in which multiple transactions are reconciled against a single corresponding transaction. For example, two statement entry transactions of £50 versus one ledger entry transaction of £100.

 

• One to One Reconciliation
  A matching process in which a single transaction is reconciled against a corresponding transaction on a like for like basis.

 

• Open banking
  Open banking lets third-party providers access customer-approved banking data securely via APIs. Open banking enables FinTech’s to access and leverage financial data for building customized and user-centric applications and products aimed at their target segment.

 

• Opening Balance
  The balance of an account at the start of a trading day.

 

• Operations
  Operations refers to the full set of processes that underpin core business products and functions, including technical and logistical tasks like reporting, risk and compliance, and cash management.

 

P

• Payment Gateway
  A payment gateway is where a customer inputs their payment information in order to initiate an electronic payment between their issuer and their vendor’s acquirer. Common examples are card machines/POS machines, but there are also examples of card-not-present gateways also.

 

• Payment Processor
  An organization that facilitates the communications, clearing, and settlement of payments between an acquirer and an issuer. Sometimes Issuers and Acquirers have their own in-house processing function.

 

• Payment Scheme Network
  A payment scheme network is an organization that provides the communication network which allows for electronic payments to be made between counterparties, for example, issuers and acquirers. Visa and Mastercard are the two best known of these, however, there are other examples such as American Express, Discover as well as regional examples. SWIFT can also be considered an example too.

 

• Payment Services Provider
  A payment service provider is an organization that offers multiple payment offerings as part of an integrated solution, for example, acquiring, gateway and processing services as well as taking care of the operational process that underpin these on behalf of their customers.

 

• Post Trade Reporting
  A specific regulator requirement requiring the public disclosure of the details of a trade in order to promote fairness and transparency in capital markets. For example, MIFID II in Europe.

 

• Posting
  The process of transferring information from a journal entry into the general ledger.

 

Q

• Quantity Mismatches
  A break/mismatch/exception caused by conflicting information on the quantity data field in a transaction/trade.

 

R

• Real Time Matching
  The process of live reconciliation as new data sets are entered into a matching process.

 

• Real Time Payments
  Real Time Payments, like ACH payments, are also typically made by bank with a Central Bank acting as a clearing counterparty, but unlike traditional ACH payments they are able to settle 24/7.

 

• Reconciliation
  The process of ensuring that two more data sets do not contain conflicting or missing information so that financial information can be recorded accurately.

 

• Reconciliation Period
  The time period over which a reconciliation process takes place, for example a day, a week, a month, etc.

 

• Reconciliation Platform
  A reconciliation platform is a software platform that allows for automatic reconciliation across different data sets as part of a wider operational processes that underpin product and service offerings.

 

• Regulatory Audit
  The independent examination and review of that organization’s operational process and outcomes adhere to regulatory standards and requirements.

 

• Regulatory Reporting
  Financial and operating information that demonstrates compliance with specific regulatory requirements. For example, in the UK, CASS reporting.

 

• Retail Bank
  A licensed institution that safeguards customer deposits, and simultaneously offers payments and credit products such as loans and mortgages.

 

• Roll-Forward
  A method of reconciliation in which the previous day’s closing balance is used as a starting point for that day’s reconciliations.

 

S

• SaaS
  SaaS stands for Software as a Service, and typically refers to software which is provided in a cloud-based environment which users can then access over the internet. This is as opposed to on-premise software, which would be hosted on a customer’s own servers.

 

• Safeguarding
  Safeguarding refers to a reporting standard for payments firms such as EMIs in the UK and EU and MSBs in Canada, which stipulate that client and firm funds should be segregated in order to prevent co-mingling to allow for swift access in a liquidity or solvency event. In the UK, safeguarding rules are incorporated into CASS.

 

• Scheme Fees
  Scheme fees are commission charges that are levied for using payment networks like Visa’s or Mastercard’s. In the context of reconciliations, these may be needed to be accounted for in transaction matching.

 

• Segregation of Duties
  A principle of internal control that is designed to divide duties in order to minimize risk and error.

 

• Sell Side Firm
  Organizations who sell securities in order to provide liquidity to markets and provide intermediary services to potential investors. Examples might include Investment Banks, Market Makers, Brokerage Firms, and so on.

 

• Settlement
  Settlement is the step in a transaction in which legal ownership of an asset, security, cash balance, etc., is transferred from one party to another.

 

• SFTP
  SFTP stands for Secure File Transfer Protocol, which is a method for transferring data. Typically this involves data encryption to restrict access to any party who should not have sight of the data.

 

• Sign off process
  A formal procedure in which under the context of reconciliation and reporting, involves managerial approval that the reconciliation process has been done correctly and accurately.

 

• Single Sided Reconciliation
  A matching process in which data is validated based on a single data source without the requirement for a second data source. This is often done via reference tables/static data and is typically used for data quality checks and duplicate entry identification.

 

• SOX
  The Sarbanes-Oxley Act, a US law that codifies financial reporting and compliance standards and controls, including the mandating of regular reconciliations.

 

• Statement Break
  A break/mismatch/exception that is caused by incorrect or missing data from the statement side of a transaction.

 

• Sub Ledger
  Similar to a general ledger, but records transactions related to specific financial accounts.

 

• SWIFT
  The main data messaging network for world banks and financial institutions to exchange information relating to transactions such as payments with each other.

 

T

• Timing Differences Mismatches
  A break/mismatch/exception caused by missing corresponding data that has not been released, that should automatically resolve when the corresponding data becomes available for reconciliation.

 

U

• Underwriting
  The Process by which an individual or institution takes on financial risk for a fee. It’s most commonly used in insurance, loans and securities.

 

V

• Virtual Cards
  Virtual cards are electronic cards that don’t have a plastic existence and are highly secure and easy to use. These electronic cards provide a user with 24/7 access to online, contactless payments with only a smartphone.

 

W

• Webhook
  A webhook is a method in which one application can send data in real-time to another when a specific event happens, meaning that there is no requirement for the receiving application to request data.

 

• Workflow Automation
  Workflow Automation is a term used to refer to the utilization of technology to automate predictable and repeatable operational tasks. For example, a reconciliation process which requires a specific set of match rules and a report output in a specific format.

 

X

• X-Date
  In a corporate action, the date on which the stock trades without the previously declared dividend, as the dividend will be paid to the new owner of the share.

 

Y

• Yield
  The income return on an investment. It is typically expressed as an annual percentage based on the investment’s cost, current market price, or face value.

 

Z

• Zero-Balance
  A method of reconciliation in which the reconciliation should always net off, meaning a starting point of zero for each day. This can also be called a ‘no-fail’ reconciliation.