Dig Deep for Data — Tools of the Future for Regulatory Reporting

Around the world, regulatory reports continue to get bigger and more complex. With no signs of this trend slowing down, how must the systems that help populate reporting templates evolve? And what additional tools will banks need to get more value from the reporting process?

As the UK’s Prudential Regulation Authority (PRA) releases its new PRA110 template for reporting on Pillar 2 liquidity, it’s a good time to assess the reporting challenge ahead. Given the average portfolio size and the need to report across different currencies and drill back into original positions, a bank’s weekly use of PRA110 alone could easily involve a billion or more data points a year.

Many other jurisdictions are making similar updates. The European Commission has recently finalized its revised rules on capital requirements in the form of CRR II, and the recommendations of Basel IV are still in the works. Every time such new regulations come into effect, they add further to the reporting burden.

As a result, there’s an urgent requirement for modern databases that – unlike their traditional predecessors – can handle the sheer quantity of information that banks must increasingly monitor and report on.

Storage and throughput of data, however, are only part of the challenge. As reports grow in complexity, it’s now often down to treasury and risk departments to fill them out. These functions may already have the specialist expertise and systems that the task demands, but they will progressively want more advanced tools for working with the data they report.

For treasury and risk, the devil is in the detail. So, there’s a new and growing demand for tools that can help analyze and validate the numbers. That means being able to drill down into the report data, see which positions make up each and every report cell – and more easily reconcile the report with source data.

With banking systems taking time to process all the information on a transaction, often the data that comes in is incomplete. When the missing pieces arrive, the last thing you want is to re-enter the whole data set. It makes sense, then, that banks also want the ability to correct and adjust the numbers in their reports. Control is critical, too, so there must always be a clear audit trail that shows what has changed and who has changed it.

Even more importantly, remember that while generating regulatory reports adds little value, the underlying data can provide a valuable source of intelligence for treasury and risk teams. Wouldn’t it be great if they could make better use of their reporting infrastructure and redeploy its data for management information and dashboard reports?

The fact is that the regulatory reporting process is only going to get more intensive as time goes on. With so much data being generated, technology tools must meet future demands head-on and help banks dig even deeper for insight and value.