Banks have attempted to improve the regulatory reporting process in the past few years but there are still significant challenges in preparing the required regulatory returns. Banks struggle to keep pace with rapidly expanding regulatory requirements. The key challenge for Chief Financial Officer (CFO)s and Chief Risk Officer (CRO)s is keeping up with the changing demands around regulatory reporting and compliance in a controlled and cost-effective manner. The pace of change, coupled withthe increase in complexity and granularity in regulatory reporting requirements mean that banks face further pressure on already stretched resources and budgets. This problem is amplified for banks spanning multiple regulatory jurisdictions and these organisations are actively looking for ways to streamline data models and standardise reporting.
In FY20, banks will focus on technology-driven improvements to their operating model so that regulatory reporting spend and effort is not only more efficient but also creates value through Marketing Intelligence (MI) insights and businessdecision support.
Options being considered, include:
The shift towards scalable technologies has also resulted in initial conversations at banks with regard to outsourcing regulatory reporting and creating industry wide regulatory reporting utilities.
European Systemic Risk Board Regulators are also looking to technology to revolutionise their approach to supervision. Regulators across the globe have increasingly focused on how they can use technology to make the current process of regulatory reporting more accurate, efficient and consistent.
Different regulators are at different stages of this journey, for instance:
Ultimately, progress is likely to be slow, given the complexity and size of the supervisory regimes these projects are looking to cover. However, the direction of travel is clear, and the technologies to support these changes are becoming increasingly available. The future of regulatory reporting will no longer be template based and will be heavily dependent on technology. Banks cannot afford to ignore these projects, and those that actively engage will undoubtedly have a competitive advantage in the long run.
Banks that implement solutions in such a way as to remain adaptable to fundamental shift in the regulators’ approaches (i.e. away from template based reporting and towards real-time data interrogation) will be the most successful. Key to these projects is not only the technology but also the data; creating a centralised and granular regulatory data model – where the data is well maintained, governed and documented should be considered the minimal viable product.
Banks are starting to look at new solutions including outsourcing, automation and RegTech to reduce cost of compliance, however, without effective data management and an integrated end-to-end operating model these initiatives will have limited benefit.
Source: Regulatory Reporting Survey 2019, KPMG UK