Why is SOC 2 Type II important for reconciliation software?

SOC 2 Type II is an independent audit report that verifies a vendor's security controls are not just designed correctly but have been operating effectively over a period of time (usually 6-12 months). It is the gold standard for SaaS trust.

What is Immutable Audit Logging?

Immutable audit logging means that once an action (like approving a match or changing a rule) is recorded in the system logs, it cannot be deleted or altered by anyone, including system administrators. This prevents cover-ups of internal fraud.

Blog Post

Cybersecurity
December 14, 2025

10 Security Features Your Bank’s Reconciliation Tool Must Have

In the age of ransomware and sophisticated phishing attacks, your reconciliation tool is a prime target. Why? Because it holds the keys to the kingdom: direct visibility into the bank's cash flows, Nostro accounts, and customer settlements. If a bad actor gains access, they can cover up fraudulent transfers or manipulate financial statements. In 2026, features like "password protection" are laughable. Here are the 10 rigorous security standards your software partner must meet.

The Non-Negotiables

When evaluating vendors like Reconwizz, ensure these features are "Out of the Box," not roadmap items.

1. SOC 2 Type II Certification

This is the baseline. A Type II report proves that the vendor's security controls have been tested over time (usually 6-12 months). A Type I report (design only) is not enough for a bank.

2. Encryption Everywhere (Data in Transit & At Rest)

Data moving between your core banking system and the reconciliation tool must be encrypted via TLS 1.2 or 1.3. Once it lands in the database, it must be encrypted using AES-256 standards.

3. Granular Role-Based Access Control (RBAC)

Not everyone needs Admin access. The system must enforce the "Principle of Least Privilege." A junior analyst should only be able to view exceptions, a manager to approve adjustments, and an admin to configure rules.

4. Single Sign-On (SSO) & MFA

Do not create new usernames/passwords. The tool must integrate with your bank's Identity Provider (IdP) like Azure AD or Okta via SAML 2.0 or OIDC. This ensures that if an employee leaves, their access is revoked instantly.

5. Immutable Audit Trails

Every click must be logged. Who uploaded the file? Who changed the matching tolerance from $0.01 to $5.00? These logs must be "immutable"—meaning even the database administrator cannot delete or alter them.

6. Data Segregation (Multi-Tenancy)

If using a SaaS platform, ensure strict logical separation of data. Client A's data should never be queryable by Client B's instance. Ask about "Row-Level Security" policies.

7. Automated Penetration Testing

The vendor should conduct annual (or quarterly) penetration tests by a reputable third-party firm. Ask to see the executive summary of the latest Pen Test report.

8. Data Residency Control

For banks in jurisdictions with strict data sovereignty laws (e.g., GDPR in Europe, localized data laws in Africa/Asia), the vendor must allow you to choose the specific AWS/Azure region where your data resides.

9. API Security (OAuth 2.0)

If the tool connects via API, it must use modern authentication standards like OAuth 2.0 with short-lived tokens. Basic Auth (username/password in headers) is a vulnerability.

10. Incident Response Plan

Security is not just prevention; it's reaction. Does the vendor have a documented 24/7 incident response plan? What is their guaranteed notification time in the event of a breach?

Conclusion: Trust but Verify

Security is the foundation of trust in banking. A reconciliation tool that is fast but insecure is a liability. By insisting on these 10 features, you ensure that your operational efficiency does not come at the cost of your reputation.

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