Many organizations treat their reconciliation and reporting as mere check-the-box activities, investing only the bare minimum to remain compliant. However, companies that deprioritize these critical back-office functions risk being caught unprepared when faced with a more stringent regulatory environment.

In a recent PaymentsJournal podcast, Roger Binks, Chief Commercial Officer at Kani, and James Wester, Co-Head of Payments at Javelin Strategy & Research, explored the current state of the back office, the challenges organizations face, and how businesses can modernize their reconciliation and reporting functions amid regulatory headwinds.

Research from Kani found notable trends among payment leaders. Just over a quarter of respondents said their firms were using fully automated tools, while many still relied on spreadsheet-based solutions for this complex process.

Nearly two-thirds of respondents also reported frequent data errors during reconciliation—errors that are expected to become more expensive and time-consuming as compliance requirements increase.

“The regulatory environment is becoming way more prescriptive than it ever has been,” Binks said. “Reconciliation reporting outputs not only have to be consistent, but they have to be traceable. If you’re having a manual process in there, the workarounds that you have to put in place to make that traceability consistent is really tough.”

“In the UK, the FCA is extending operational resilience requirements into payments,” he said. “What this means is daily reconciliations, real-time controls, and clearly documented processes are going to be mandatory. They’re going to be the sort of baseline of everyone’s business.”

As compliance tasks continue to grow, they add pressure to already strained operations. The report found that roughly 80% of respondents often miss reporting deadlines.

These difficulties will mount for organizations that don’t take steps to modernize.

“Things like reconciliation, reporting, compliance, these are things that we all talk about and we have for a long time,” Wester said. “We have talked about workarounds and band-aids and fixes and manual processes that are employed, while we also know that regulatory compliance and all of the things that that entails, it’s only getting more complex.”

“It’s a known issue, we all talk about it, and yet it continues to be something in 2025 that we are still talking about,” he said. “I’m almost sad about it. It’s almost like, ‘When do we start fixing some of this stuff, especially when we know that regulation and compliance are not going to get any less complex in the future?’”

One reason manual processes and reporting issues have lingered is that they haven’t been a priority for many organizations.

“Whenever you see regulation or some type of mandate for the way a report must be submitted—or            anything like that—a financial institution, a bank, or a business, they often look at what they must do and they work back from there,” Wester said. “It’s almost as though they try to find the least efficient way to do it. To me, I think we look at it the wrong way.”

Instead of viewing compliance as a chore, organizations should recognize that the reporting process produces a critical output: data. Through this lens, reconciliation and reporting become valuable assets—ones that can deliver dividends by offering deep insights into operations.

Beyond increased visibility, a modernized reporting process also offers tangible efficiency gains.

“We asked some questions around how long it took for people to prepare data—just getting it ready for the reconciliation process,” Binks said. “We found that the average UK payments business spends about three hours preparing data before reconciliations can even happen. With that mandatory daily reconciliation process being a requirement—if you work that out—it’s about 700 hours every year spent just preparing data.”

“Think of what you could do with 700 hours a year in terms of other work,” he said. “There’s some stark numbers in there which we can’t ignore.”

As organizations begin updating their back-office processes, many will face the age-old buy-or-build dilemma. However, with the compliance bar rising rapidly and shifting daily, companies that choose to build solutions face significant challenges.

One of the main hurdles to in-housing is ensuring the organization has the right resources in place—starting with personnel. But maintaining a dedicated compliance team presents its own set of issues.

“It depends upon the way the internal organization is structured, which is oftentimes around a particular group or a particular person or a particular unit that’s built a certain way,” Wester said. “Just training is usually very inefficient. If that person ends up leaving—if the person in accounting retires and they were the one that knew how everything was put together—then it becomes a process of unpacking what they did to make that process work.”

Beyond assembling the right team, organizations must also possess the technical expertise and engineering capacity to develop an in-house solution. This is often a struggle: 60% of surveyed firms with internal solutions reported that resource constraints directly impacted their business growth and agility.

Many of these firms also noted that generating reports was too time-consuming, and that operating systems across multiple payments channels remained a challenge. Additionally, maintaining an in-house solution is a continuous process, one that organizations simply aren’t equipped to take on.

As a result of these challenges, few businesses are pursuing the in-house route. In Kani’s survey, less than 10% of respondents said their firm had built its own system.

“If you’ve in-housed it, all of those different changes—even if they’re internal requests—everything becomes a dev ticket,” Binks said. “Everything becomes an item on a list that someone’s got to deal with. If that’s not your main business, suddenly you’re in the business of building and running a reconciliation team, and that’s not really your core.”

Despite challenges with in-house processes, many organizations continue to lean on them—often because they’re unaware of better alternatives.

“I think that’s one of the problems for people who are in compliance or operations—they don’t know what they don’t know sometimes in terms of what is available,” Wester said. “But also I think that sometimes operations and compliance people are not good advocates for their own needs. Sometimes they’re not tied to revenue, so building a business case for something like a solution in the back office can be a little bit difficult.”

Organizations that begin exploring potential solutions can uncover powerful benefits. Platforms such as Kani manage every aspect of the compliance process, including ongoing maintenance and upgrades.

Another advantage of partnering with a provider is gaining access to the collective knowledge and experience across their entire portfolio. This enables them to stay current with regulatory changes and make proactive improvements to the platform.

“It’s about operational agility,” Binks said. “This isn’t about just speed, it’s about control, traceability and repeatability in a process that you can trust. If you can get that, then you’re in a good place, but it’s a challenge.”

“I would think about getting off Excel and manual systems,” he said. “It’s time to bite the bullet. People just need to work out when, and accept the fact that it’s coming at some point. The back-office efficiency Holy Grail is there—you don’t have to go and build it yourself.”