Regulatory reporting what is

But this is easier said than done. Regulatory requirements differ across the globe. Some governments follow an approach where the whole banking spectrum is under their control, thus limiting the entry of new players in the market. On the other hand, some governments do not directly control banks but put such restrictions in place which compel them to disclose accurate information at a timely interval in order to keep a check on them.

Whatever the case, regulatory reporting is a vital cog in the banking business and is here to stay. So what makes it all so important? It can be compared to a type of early warning system specially crafted for banking organizations. With so much of load on the current legacy banking systems, they are working to their limit and cannot handle all the extra information generated with ease.

Some of the key challenges faced by banks in such a scenario are:. In this regard, it is very important to understand the role that technology plays in the ever changing regulatory setup to meet the reporting requirements.

Today, in the market there are many tools and software present but the demand for newer technology increases with every new regulation introduced. These regulatory reporting tools help banks avoid inherent problems like legacy system issues, lack of granular data, excessive system feed and complexity in data mapping, compatibility for data feeds.

Hexanika is a FinTech Big Data software company, which has developed an end to end solution for financial institutions to address data sourcing and reporting challenges for regulatory compliance. Hexanika helps establish a compliance platform that streamlines the process of data integration, analytics and reporting. Leveraging templates across all reports can enable banks to effectively provide an accurate and consistent picture to all their regulators.

This approach can also have significant benefits for the business. Consolidating data, calculating results, and submitting reports have become highly complex. Smaller institutions are facing more complex reporting demands that can strain small reporting teams. Meeting this complexity without increasing resources is a challenge that requires an automated management of the full process. The process also considers the concrete steps currently handled manually, such as changes and amendments in raw data, aggregated data, and in final reports.

Central to this is an automated change approval process that both controls and records who can make and approve changes. Automation ensures speed and accuracy, and can be leveraged to provide management control and audit capabilities to highlight what changes were made and on whose approval. This audit capability has now become a requirement for many regulators. One of the most important aspects of the regulatory reporting frameworks evolution is the integration of redundant data from different sources and different areas.

Reconciliations within the same area, risk management for example, can be performed without major challenges, as in most cases the data sources are consolidated in the same data repository. On the other hand, when it comes to reconciliation across different areas — regulatory reporting e. This is not necessarily a problem for the individual production of the reports, but it becomes cumbersome when banks need to reconcile the data between them.

Globally, regulators are increasingly scrutinizing the low-level data of the regulatory reports. This involves also ensuring that the same data from two reports is identical, such as provision amounts between risk and finance reports.

To cope with these reconciliation challenges, banks have been investing in teams that work exclusively on the process of reconciling risk, finance, and ledger data. Efficiently reducing the workload of reconciliation teams requires banks to centralize all the reporting data on the same platform, enabling the automation of the reconciliation process.

The process becomes more optimized not only when the data repository is unique, but also when all the reports are produced by the same reporting tool or system. The decision to invest in a centralized regulatory reporting platform with a consolidated data repository, even though it reduces the amount of manual work, is often difficult to make for financial institutions. Management reporting changes parallel the increased requirements of regulatory reports.

The financial crisis has required management to be able to quickly obtain information about exposures and other measures. Typically, one of the most important questions that management or internal reporting should answer pertains to the total exposure of the group to one client, group of clients, country, industry sector, and so on.

The same techniques that foster optimal regulatory reporting also enable improvements in management reporting, especially the creation of a centralized data repository. The coherent combination of data from different sources is the cornerstone of any good management reporting. Moreover, for consistency purposes, it is critical that the management and regulatory reporting platforms share the same data; otherwise, yet another reconciliation process would need to be implemented.

Increasing regulatory reporting requirements and the reduced timelines for the financial institutions to adopt those requirements can lead to the main pitfall — managing the reporting processes in silos.

Working in silos may give responsibility and independence to the individual areas affected by the reporting requirements, and even gives the impression that it is a better and faster way to respond to the regulations.

In the long run, however, reporting silos offer a poor response to the often rapid evolution of the requirements, such as:. In a world of more numerous and more complex reporting requirements, it is critical that this subject is handled by an independent department, across all functional areas of the financial institution, and with the decision power to build its own data infrastructure and reporting tools.

Bank for International Settlements, A global regulatory framework for more resilient banks and banking systems - revised version, June Skilled market researcher; growth strategist; successful go-to-market campaign developer. Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.

Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area. Victor Pinto, Director, Solutions Specialist from Moody's Analytics discusses the latest trends in regulatory reporting and the latest best practices to overcome these challenges. This improves customer trust. Despite the amorphous nature of regulatory reporting, depending on the nature, size and scale of the business, here are some of the more common forms that you may face.

By using DueDil, you agree to our use of cookies. Risk selection. On Demand Beyond Compliance June 15, Companies in Banking. How to consume Our Technology. Who we are. Sign in. Guides What is regulatory reporting and why does it matter? July 8, To protect yourself and your business you need to know how regulatory reporting affects you. Who and what is regulated? Who does the regulating? Why is this important? Types of regulatory reporting Despite the amorphous nature of regulatory reporting, depending on the nature, size and scale of the business, here are some of the more common forms that you may face.