The global regulatory environment is undergoing a major transformation, marked by a shift to data-driven surveillance and stricter compliance standards. Financial institutions may feel burdened by regulators' increasing demands for detailed, frequent, and extensive data, but this transition will help identify and mitigate systemic risks, monitor market activity, and improve financial system performance. The aim is to strengthen regulatory capacity to maintain stability.
With countless changes and proposals being made, there is a marked increase in regulatory authorities' emphasis on detailed data reporting. This momentum is driven by both rising regulatory expectations and continued advances in data management technology. Recognizing the benefits of robust data-driven oversight, we expect more regulatory bodies to adopt detailed data reporting frameworks. Additionally, reporting requirements are expected to evolve to become more comprehensive and sophisticated, covering a broader range of data points and reporting frequencies.
Powering detailed data reporting
Regulators have been considering alternatives to replacing traditional template-based integrated regulatory reporting with detailed data and digital reporting systems. It envisions a shift to detailed data-driven regulatory reporting, eliminating the need for numerous templates and allowing regulators to continually reuse shared data points for various analytical purposes.
- Strengthening regulatory oversight: Regulators need deeper insight into the financial system to proactively identify and address potential risks. Detailed reporting facilitates this by providing a more comprehensive and detailed view of a financial institution's activities.
- Improve data quality and consistency: Traditional reporting methods often introduce inconsistencies and data quality issues. A granular data reporting approach standardizes data formats and definitions, improving accuracy and facilitating efficient analysis by regulators.
- Reduced reporting burden: By streamlining the data collection and aggregation process, detailed reporting can reduce a financial institution's overall reporting burden, potentially increasing operational efficiency and reducing costs.
- Advances in technology: Advances in data management and reporting technologies, such as cloud computing and data storage, have enabled efficient implementation and scalability of these efforts. Additionally, regulators are increasingly leveraging artificial intelligence (AI) to enhance their oversight capabilities. AI is being leveraged for a variety of tasks, including analyzing extensive datasets to identify patterns of non-compliance, automating regulatory reporting procedures, and even predicting potential risks within regulatory departments. These AI-driven applications will not only streamline regulatory operations, but also facilitate a more proactive and efficient approach to regulatory oversight.
Regulation is fluid
As regulators around the world prioritize detailed data reporting, each region and jurisdiction has established individual approaches and timelines to address this need. These regional efforts highlight a major shift towards data-driven regulatory reporting practices.
Asia Pacific
- Thailand RDT: Thailand's Regulatory Data Transformation (RDT) initiative, mandated by the Bank of Thailand, mirrors Europe's AnaCredit framework in its approach. Initially implemented for financial institutions in 2020, the scope of the RDT was expanded in January 2024 to include non-bank financial institutions (FBGs). The implementation strategy follows a phased approach, starting with credit reporting in 2020, with subsequent stages targeting foreign exchange, derivatives, payments, and securities. This rollout will begin with credit reporting for financial institutions in July 2023, with plans underway to extend this framework to his FBG by 2025.
Comprehensive data collection: Comprehensive Data Collection (CDC) APRA’s efforts to modernize data collection methods from regulated entities. This effort includes moving from aggregated reporting to table-based reporting, providing a more comprehensive and detailed approach. This transition is expected to occur in stages over a period of five years or more, including across the financial services industry. In particular, this sophisticated data collection process is implemented iteratively through APRA Connect. The regulatory framework is still in the early stages of development and APRA plans to begin industry consultation in early 2025, followed by a process to design and develop solutions.
- Hong Kong East Germany: GDR (Granular Data Reporting) is the implementation of a detailed table-based data collection initiative by the HKMA. Launched as a pilot program in 2019, it initially covered two of his data areas: Residential Loans (RML) and Corporate Loans (CL). The second phase of the program began in early 2021 with the introduction of two additional data areas: Interbank Loans and Deposits (IBL) and Debt Securities in Hold (DSH). There were also revisions to RML and CL. The third phase began in the third quarter of 2021 and expanded the list of participating banks in Hong Kong. From 2022 to 2023, several revisions were made to the GDR, including revised data fields, validation rules, and alignment with the HKMA's form-based reporting.
In the latest version released in April 2023, there are 10 report data blocks in RML, 9 in CL, 4 in IBL, and 2 in DSH. Initially, GDR submissions were done in two basic ways: by email submission and by the pilot GDR system. These methods are still in operation but will be replaced by the Common Submission Platform (CSP). CSP is a portal introduced by the HKMA in Q3 2023 for authorized institutions to submit their GDR data. East German participants in Hong Kong will transition to his CSP for submissions from March 2024.
- China: China's financial sector operates under various reporting frameworks, including those established by regulatory bodies such as the China Banking and Insurance Regulatory Commission (CBIRC), the China Securities Regulatory Commission (CSRC), and the People's Bank of China (PBOC). depends on. These frameworks require financial institutions to report data related to operations, risk management, and compliance.
- India: The Reserve Bank of India (RBI) is considering introducing a detailed data reporting framework aimed at improving oversight of the financial system. A pilot program is underway to assess and evaluate feasibility and effectiveness in the Indian context.
- Singapore: In 2018, the Monetary Authority of Singapore (MAS) envisioned an initiative to eliminate data duplication by capturing granular data from banking systems. They have made some progress with MAS610 and the revised Top Borrower Group Survey, but have not yet concluded their vision.
- Malaysia: Bank Negara Malaysia (BNM) is considering implementing a GDR framework as part of its ongoing efforts to strengthen regulatory oversight and promote financial stability.
europe and uk
- Anna Credit: The European Central Bank (ECB) is launched ana credit It was published in September 2018 with the aim of compiling detailed information on bank lending to businesses in the euro area. The Analytical Credit Dataset or 'AnaCredit' is designed to provide a deeper understanding of financial policy, especially with regard to small and medium-sized enterprises.
- BECRIS 2.0 in Belgium: From January 2024, the National Bank of Belgium (NBB) will integrate its existing Central Individual Credit Register (CICR) with its existing system, BECRIS. Information on corporate credit (AnaCredit) has been part of BECRIS reporting since 2016, but NBB will extend BECRIS to replace his current CKP/CCP application.
This integration is part of NBB's efforts to modernize its entire credit data collection system. BECRIS Individual Credit Reporting (ICR) will now include institutions that issue credit agreements to individuals. The previous IT infrastructure was inadequate for today's requirements and could not cover the expanded data needs outlined by NBB. Therefore, NBB is Migrating credit data collection and consultation to an integrated platform, BECRIS 2.0.
- Finnish Positive Credit Register: Finland coming soon positive credit register. As of April 2024, the register is to collect information on credits issued to individuals in Finland. Reporting agents must provide detailed loan agreement data to the register. This initiative will enable Finnish regulators to better monitor individuals' debts, assess their creditworthiness and collect reliable information about the credit market.
- Bank of England (BoE) supervisory report: The BoE requires banks to provide detailed data on various aspects of their operations, including exposures, transactions and risk management practices.
- Solvency II: The European Union (EU) Solvency II Directive for insurance companies requires detailed reporting on risk, capital adequacy and solvency.
Navigating complex and evolving situations
Implementing detailed or digital reporting changes is not one-dimensional and poses several challenges for financial institutions.
- Data management complexity: The task of collecting, storing, and effectively managing vast amounts of detailed data requires a robust data governance framework and efficient data management infrastructure.
- technology investment: Financial institutions embarking on such initiatives will need to make significant investments in implementing and maintaining technology solutions to support these initiatives.
- Regulatory uncertainty: The ever-evolving regulatory landscape and differing interpretations between jurisdictions can create uncertainty for institutions navigating the complexities of compliance.
- skill management: Properly allocating financial, technical, and human resources to comply with regulatory initiatives is a daunting task. Compliance requires continuous monitoring, evaluation, and improvement, and requires a continuous investment in resources and staying up to date with regulatory changes and best practices, which can be difficult.
Take a strategic approach and implement detailed reporting
Financial institutions may choose in-house expertise to address their immediate regulatory needs with customized solutions. However, this approach may fail to keep up with evolving regulations and may prove unsustainable.
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RegTech solutions enable real-time compliance by continuously monitoring and integrating regulatory updates. In addition to advanced analytics and reporting capabilities, it provides insight into compliance status and areas for improvement, streamlines processes, and Improve data quality by 20% and increase operational efficiency by up to 40%..
Enabling systems and processes to support detailed data reporting presents an opportunity to optimize risk management practices and gain access to richer data sets for deeper insights. I thought of it, but it was a lucky day. Unleash the full potential of detailed data reporting to help your institution succeed.