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Banks struggle with more stringent regulatory requirements and lack of experts

Banks struggle with regulatory requirements

Czech financial institutions have had a steady supply of new requirements from local and European regulators ever since. We have seen a 351% increase in the number of regulatory reports just over the past three years, but only an average increase of 0.9% FTE in the capacity of reporting teams.

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Adéla Půrová

Supervisor, Marketing and Communications

KPMG in Czech Republic

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KPMG’s regulatory benchmark survey shows that almost all banks are worried about further increases in regulatory requirements and heightened demands for daily transaction data. The reports’ focus on data requirements is growing, with more data areas being included in the reports, both in more detail and with increasing frequency.

“The extent and detail required of reported data have been growing exponentially. Deadlines for submitting reports to regulators are fixed but the time allotted to reporting teams for data collection, preparation, and subsequent consolidation is ever shrinking, leaving them short time to deal with data quality issues,“ said Marta Kelnerová, Senior Manager at KPMG, commenting on the survey results.
 

Shortage of reporting experts

As the requirements on the form of reports have changed, so have the demands placed on employees in the field of regulatory reporting, leading to a 43% turnover in regulatory teams over the last few years.

There is a long-term shortage of reporting experts on the job market, mainly because job duties are considered unattractive and salaries are not competitive when compared to other positions in reporting. Therefore, filling new positions is ever more difficult, and training and retaining employees even harder. When it comes to human resources, the situation comes close to a time bomb.

Regulatory teams are perceived as a necessary evil not capable of delivering any new business to companies. Management at financial institutions is continuously grappling with distributing resources between the regulatory sector and the banking business.
 

Investment: automation and IT

At the same time, investments in report creation and automation, IT systems, and data warehouses are growing exponentially.

Among all respondents, 39% apply some degree of automation to their regulatory reports (not full automation, however). The rest of them – 61% – are actively working on improving their automation processes. According to banks, the largest obstacle preventing them from full automating their regulatory reporting is total cost, especially when compared to full automation’s expected benefits. Low data quality and other priorities within the institution were also among mentioned obstacles.
 

About the research

KPMG has gathered information on the current situation of regulatory reporting teams in Czech banks. We approached 31 institutions either directly or through the company responsible for regulatory reporting within their group. Out of these, 29 institutions provided us with data, while two entities refused to participate.

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