Case Study - Premier Credit: bank reconciliation with ReconArt

The company:

Premier Credit Limited is a microfinance company established in 2013 to provide credit only financial solutions to small and microfinance entrepreneurs in East Africa. Established by industry veterans with over fifteen years’ experience, Premier launched initially in Kenya. The company’s successful growth is now seeing it expand operations into Uganda and Tanzania and Premier Credit now encompasses three different entities.

Challenges:

Within the first year of its existence, Premier Credit gained over 17,000 clients in Kenya alone. It services them with 350 staff spread across twenty-two branches. With each client making a payment on average three times a month, today Premier is processing about 50,000 monthly receipts, and that number continues to grow. Around 80% of all payments by customers, today come in via mobile money through Safaricom’s M-PESA platform, with the remainder being more traditional bank deposits.

Daily reconciliation activities for Premier Kenya alone already amount to 1,200 mobile money payments per day, a proportion of which don’t get to their destination properly and need to be researched. Having experienced the effects of trying to do this manually in the past, Premier’s executive team recognized the need to put in place early on an automated platform. This would ensure the early detection of errors in posting receipts, and that all payments made by clients have been credited correctly.

Solution:

Knowing exactly what was needed to introduce a sound reconciliation platform upfront, the leadership team was introduced to ReconArt’s fully automated reconciliation solution. It quickly realized that the ReconArt™ Total Reconciliation Lifecycle™ delivers all of the capabilities required to address all the problems they had been fighting with for years in prior companies. Furthermore, by implementing the solution early in the company’s development, and confident in the ReconArt™ solution’s ability to scale significantly, Premier was able to avoid bringing on additional headcount to manage manual reconciliations.

The cloud-delivered ReconArt.net™ software-as-a-service solution was deployed to manage all Premier Kenya’s transactional reconciliations. As part of the daily matching of data, ReconArt™ pulls data from Premier’s cloud banking platform – Mambu, with externally sourced data feeds from Safaricom’s M-PESA platform for mobile money, Co-operative Bank of Kenya for receipts and Commercial Bank of Africa for disbursements. The matching process is extremely automated, as is the immediate identification of situations of operational risk, freeing users to investigate and resolve any exceptions quickly and efficiently.

Benefits of ReconArt ™:

By introducing ReconArt™ into its technology mix early on, Premier Kenya has already seen multiple benefits and returns that are only set to grow as its business expands within Kenya and across Tanzania and Uganda. These include:

• Automation and significant speed up of the process of matching
• Ensured accuracy of client payment allocations
• Reduced operational risk through the elimination of fictitious payments that could otherwise allow higher or additional loans to be issued
• Enhanced customer satisfaction through error reduction and the prompt resolution of the few that do occur
• Significant ROI. Based upon historical experience, Premier Kenya estimates that, to date, without ReconArt ™ this size operation would require 5-6 full-time equivalent employees just for doing reconciliations. Instead, the company achieves a better and faster process with just two employees who also have other functions and are not dedicated to reconciliations.

Summary:

The deployment of ReconArt™ for Premier’s Kenya operations has aligned completely with the company’s expectations. After an initial brief learning curve moving from a manual Excel-based environment, users today find ReconArt™ easy to operate. As a result, ReconArt™ will be next rolled out to Uganda and Tanzania companies.

Tim Carson, CEO of Premier Credit best summarizes the overall advantages:

ReconArt™ gives us faith in the financial numbers we report by delivering accuracy, reduced operational risk and a fully auditable environment. An important added value is that it paid for itself almost immediately through significant cost savings of tasks that would otherwise have had to have been done manually.

Tim Carson

August 2023 update. Integration with Mambu completed.

Since the initial implementation in 2015, Platcorp has continued to expand its geo footprint, client base and product range. The robust growth achieved by the company has driven expansion in the implementation scope and the cooperation with ReconArt as well.

PlatCorp maintains two instances within the ReconArt environment – one for each of the flagship brands Platinum and Premier. They cover multiple location in Uganda, Kenya, Tanzania, South Africa, Zambia, etc. The ReconArt deployment has expanded in several dimensions – more users, more matching accounts, and higher transaction volumes.

Following an internal assessment, PlatCorp prioritized the full automation of data imports into the system.

“We did an internal survey to check how long it takes an accountant to download the General Ledgers and Balance sheet used for our Daily Reconciliation process, we realized that in some of the subsidiaries it would take even 30 minutes to download a single GL and upload it to ReconArt.
This guided the decision to have an automated process where GLs from the various subsidiaries would be automatically downloaded and uploaded to ReconArt.”

The two teams kicked off a project for API integration between Mambu, the Client’s core banking system, and ReconArt, PlatCorp’s account reconciliation solution.

The ReconArt development team has built the connector between the GL and the recon solution. That became feasible in 2022 when Recon Data Factory (RDF) was launched. RDF is an extension that enables ReconArt users to build their data transfer automations without any coding experience.

The development of API v.2 by Mambu gave a green light for extraction of selected columns from the GL and their scheduled transfer into ReconArt. That significantly increased the efficiency of data delivery from the GL into ReconArt for bank reconciliation process. Scheduled data exports for reporting and compliance purposes are also orchestrated via RDF.

The Platcorp team testifies about the results:

“It was really surprising that the time frame reduced from 30 minutes per GL to 5 seconds for all GLs.
The Automation has significantly reduced the time and effort required for reconciliation processes. By automating repetitive tasks, such as import, we have been able to save valuable time and allocate our resources to more strategic and value-adding activities. It has also minimized the risk of human error that is inherent in manual processes especially due to the large volumes of data we interact with.”

The intensive communication between ReconArt, PlatCorp and Mambu accelerated the process to success. The Client team has demonstrated a strong drive for improvements and an openness to innovation. PlatCopr are planning to explore further the external source integration options provided by RDF, such as bank connector management for the stack of bank statement they process on a daily basis.

Besides confidence for the team, this milestone underpins the Client’s ambition to scale up the business operations in the future. ReconArt secures the capabilities to handle larger transaction volumes, incorporate new data sources and onboard new reconciliation down the road.

“Finally, due to the evolving nature of fintech business, this system integration can accommodate increased transaction volumes without significant manual intervention and this scalability and adaptability will eventually support organizational growth and ensure that reconciliation processes remain efficient and effective over time.”

As our relationship approaches its first decade, we are delighted to hear that ReconArt has continually supported PlatCorp in the successful rally, providing superb functionality, responsiveness to the customer requirements, first class support service. We a proud to have built a showcase partnership with PlatCorp and we are looking forward to the next chapter.