Fact no.1: In a 2017 report, the European Commission indicated that the major cost drivers for supervisory reporting were unclear requirements, lack of technical guidance and insufficient automation of reporting.
Fact no.2: A 2019 study by McKinsey and Company in estimated that regulatory reporting by UK banks costs them £2 billion–£4.5 billion per year.
Smoothing the waters: Simplifying data collection through technology
Data is the world’s most valuable resource. Endless streams of data are circulating today between the financial market and regulatory authorities. mean that more data than ever before is being created and captured. At the same time, regulators expect more high-quality, timely data to guide them in their decision-making and supervision. These changes have put pressure on the Technological advances and automation current data collection processes. They have increased costs and put a never-before envisioned strain on internal processes and systems. Digitization and technology tools may offer solutions to these problems. Technology could transform how the data collection process works, with benefits for the regulators and the industry as a whole.
Technology could reduce the regulatory burden on firms while delivering greater standards of compliance. That is why technology is put in the forefront to facilitate data collection – having a huge potential that has yet to be fully explored.
One of the Bank of England’s key reforms is the move to a more streamlined, efficient approach to data collection. This reform includes making data collection more consistent across domains, sectors, and jurisdictions, and designing each step in the data collection process with the end-to-end process in mind.
Data users need:
- timely, good quality data- posing challenges for filers in terms of their internal data collection processes;
- flexible datasets that can be repurposed when required- providing a case in point for adopting common data standards;
- efficient processes to collect and store data- emphasizing the need for standardized data and a deepened understanding of how reporting requirements are mapped into data concepts.
Choppy waters: Data and the regulator
For the regulator, receiving high-quality data at the lowest possible cost for the industry is the main facilitator to use and promote innovative technologies.
In order to reduce the regulatory risks, improve effective collecting, processing, and analysing massive sets of financial market data, it’s crucial to invest in tools that facilitate the understanding of the data journey across the entire reporting cycle. Regulatory technology will save costs and resources going forward, will help to collect quantitative and qualitative data quickly, and therefore will help to monitor and supervise the market promptly and more efficiently.
Data collection is one of the core processes within data management - required to prepare the data for analysis. Facilitating, simplifying, and improving data collection is the main challenge for the market to be solved by using technological solutions.
Choppy waters: data and the market
Whereas today the hype is centered around many buzzwords such as AI, Machine Learning and deploying solutions based on Distributed Ledger Technology (DLT) or even blockchain, data remains at the heart of the matter.
Buzzwords aside, companies still struggle to keep up with the data reporting requirements and their magnitude at all steps of the way:
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Data collection |
Data transformation |
Data validation |
Data submission |
As the financial services sector is probably the most data-intensive sector in the global economy, the impact of technology on the sector is hard to overestimate.
The financial services industry has been investing heavily for more than a decade in data tools and given the recent developments in both the regulatory and data collection fields, it will continue to do so over the next years.
Regulatory pressure forces the industry to disclose more diverse and granular data to central banks and regulators. Technological evolutions to support the collection and processing of huge amounts of complex and diverse data at sufficiently low cost and in a reasonable time, provide evident benefits to the industry. New technologies are increasingly being used to improve the quality and quantity of different data, as well as collecting entirely new kinds of data for reporting purposes.
Benefits of the use and implementation of new technologies for market participants are evident: reduce costs, streamline business processes and improve efficiency. New technology solutions facilitate collecting, aggregating, consolidating enormous amounts of data, for further analysis and reporting.
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Sailing out into the unknown:
Transforming data collection post-Brexit