More sophisticated regulation and growing volumes of supervisory data became a common theme across the world. For instance, the Bank of England (BoE) receives more than one billion rows of data every month according to the ‘Review on the Outlook for the UK Financial System’ published by the Bank. No doubt, the amount of data flooding is exponentially increasing putting Regulators worldwide under pressure to balance maintaining financial stability and security through effective regulation while implementing the innovative tools to collect and process the data more effectively.
This is also accelerated by the global ESG disclosure push encouraging financial authorities to enhance data collection and analytics for assessing institutions’ climate and environment, social and governance (ESG) risk management (e.g., green market monitoring, peer-group/ risk classification, and stress testing).
More about upcoming key standards, among which are the International Sustainability Standards Board (ISSB) Standards and the European Sustainability Reporting Standards (ESRS) we wrote here.
Even though the financial authorities are effectively responding to data challenges by developing regulatory frameworks, enhancing data infrastructure, and leveraging technology to improve their digital financial ecosystems – there are still challenges unaddressed.
Financial authorities creating data-driven DNA
Moving away from data collection relied on paper forms, separate files (Excel, PDF, Word, TXT, etc.) sent electronically (email attachments, web portal, or another file transfer system), as well as data storage in disjointed databases - financial authorities are increasingly automating their procedure for data collection with technologies like the ATOME Vortex.
Offering additional features the solution also allows them to tackle a bigger scope of issues related to data collection which are mostly caused by the lack of automation. According to the State of SupTech Report 2022 prepared by Cambridge: Cambridge Centre for Alternative Finance (CCAF), delays in data submission (16,9%), human error in data collection (15.3%) are among the top five data challenges along the supervisory stack faced by the financial authorities.
Source of the image: https://drive.google.com/drive/folders/1bCnvh1RFWMODeM9CZvDlhu9iJb2GNWKB
Tapping into this challenge, the ATOME Vortex solution allows Data Authorities to keep control over data collection by generating and updating multiple reporting schedules for supervised reporting entities and automating the collection of the reporting submissions.
Moreover, when requirements or filling dates change, with ATOME Vortex Data Authorities can dynamically update data to reflect the most current information for their subordinates.
Tackling regulatory reporting challenges with confidence
Increasing data and reporting requirements from financial regulators may cause confusion in regulatory requirements resulting in a vicious cycle of incomplete (11.9%) or messy (10.9%) data received from filers (according to the State of SupTech Report 2022, see the figure above).
Moreover, large entities with multiple branches operating within the European Union (and beyond) are subject to different regulatory requirements in each jurisdiction they operate. The laws and regulations of their home jurisdiction may also apply to the activities of domestic financial institutions and their clients, customers or counterparties taking place in foreign jurisdictions, in addition to the laws and regulations of the foreign jurisdictions themselves.
An interesting observation was shared by the Bank of England. Before implementing reform for the transformation of data collection, the Bank of England conducted a review of the future of the UK’s financial system and identified key challenges relating to the efficiency and effectiveness of how data is collected, which can be found in different jurisdictions across the world. Among other concerns, industry participants expressed that understanding reporting instructions was one of the greatest sources of (avoidable) cost of the data collection process. The difficulties they mentioned include finding the latest version of the instructions, locating all the relevant documents, navigating the Bank's website hosting the instructions, and understanding the instructions as they are written in over-complex legal language.
As different reports show, this challenge is common for different jurisdictions and poses even bigger risks of incompliance for the reporting entities. A unified portal where all reporting requirements and submission dates are presented in a clear view – is our response encapsulated in the ATOME Vortex solution designed to address Reporting Entities’ challenges as well.
For Data Authorities’ subordinates, Reporting Entities, ATOME Vortex serves as a single source of truth for reporting requirements, thus providing them with greater transparency and accuracy of reports. Such entities can submit the data straight from the list of reporting requirements or seamlessly integrate it through an API.
Leveraging the capability to view the list of reports scheduled for them and keep track of all relevant reporting requirements – Reporting Entities may focus on preparing the compliant report on time, not chasing the regulatory requirements and related changes.
Outcomes powered with the ATOME data validation tool
Combining the ATOME Vortex with the data validation tool ATOME Particles, both Data Authorities and Reporting Entities can gain more advantages by leveraging the opportunity to run quality checks against tried and proven validation rules for regulatory reporting compliance. Automated data validation ultimately reduces human errors and allows to build up databases needed for performing accurate analytical work.
Speak to BR-AG tech experts to discover ways to start using intelligent automation for your data collection & regulatory reporting processes or request a comprehensive demo of the ATOME Vortex solution: