Gain Insights into Current Trends and Challenges Impacting the Financial Services Industry

Find a Silver Lining to Regulatory Reporting

When it comes to regulatory reporting, financial institutions feel increasingly boxed in.  On one hand, the number, frequency, and complexity of reports continues to spiral, especially for global financial institutions.  At the same time, regulators are strongly encouraging firms to spend more time on analysis and review, such as the U.S. Federal Reserve’s guidance that financial institutions spend 80% of the time allocated for regulatory reporting on analytics/reviews and 20% on data compilation.  Financial institutions also continue to struggle with data aggregation and quality and, in many cases, the last stages of reporting are often a largely manual process.

While facing growing regulatory costs and complexity, financial services organizations are struggling to realize the positive impact of more rigorous reporting requirements.  They are compiling significantly more data for reporting purposes, but do not have adequate time and resources to fully analyze and gain new insight from this data – translating to a missed opportunity. 

Oracle Financial Services and Lombard Risk have collaborated to create a first-to-market solution – Oracle Financial Services Analytical Applications (OFSAA) Regulatory Reporting – that addresses these important requirements and helps financial services organizations find a much-welcome silver lining in today’s prescriptive regulatory climate. 

Tying Up Loose Ends

Many organizations continue to address regulatory compliance and reporting with multiple, and often non-integrated, point solutions.  This reality amplifies data integrity issues and fuels the need for additional manual intervention, especially in the data staging and report preparation areas, which, in turn, leaves less time and resources for analysis. 

The growing challenge of data integrity cannot be ignored or minimized. Increasingly, regulators cite data integrity, consistency, and level of detail issues as Matters Requiring Attention (MRAs), which, in turn, has a ripple effect throughout an organization. C-level executives, increasingly uncertain when vouching for data accuracy to regulators, are pressuring lines of business for greater detail and validation, all of which drives greater manual intervention, higher compliance costs, as well as lost opportunities. 

To address these issues, simplify compliance, and derive new business benefits from the wealth of data collected throughout their enterprises, financial services organizations must consider regulatory reporting compliance as a holistic process and seek end-to-end automation throughout with an integrated environment that includes:

  • Staging Area ‒ Regulatory reporting requires data from many different source systems, such as core banking, accounts, customer information, general ledger, and more.  To alleviate the impact of siloed systems, banks need a platform that will consolidate all required data, creating a golden source for customer, performance, and regulatory information.  The creation of a single repository and unified staging environment is the first step in addressing reporting data integrity and complexity issues. 
  • Processing Environment ‒ This area forms the analytical core, powered by data from the staging area. It includes the analytical applications required to complete calculations for regulatory reporting, including liquidity risk, market risk, credit risk, Basel regulatory capital, economic capital, operational risk, and anti-money laundering, to name just a few.  
  • Results Production – Capturing the metrics and analysis from the processing phase, the reporting environment automates the process of populating reporting templates as well as managing distribution and submission.  Report production is often the point at which manual intervention reaches its peak, even when working with a third-party firm, due to the need to validate, reformat, and even rekey data. Tight integration between the processing and reporting environments is essential to achieving truly automated reporting, which, in turn, can drive down costs, accelerate submissions, and free more time for analysis.
  • Governance Layer – The creation of a golden source of data is a first step in improving data integrity, but it is not the sole solution. Data must be interrogated throughout the analytical and reporting process. As such, banks require an integrated governance environment that supports general ledger reconciliation, enables additional data quality checks, defines issues and action plans, and identifies key indicators.

Many financial institutions have made incremental progress on integration within and between some of these functional areas.  End-to-end automation, however, has eluded the industry in the absence of a complete commercial regulatory reporting solution.  As a result, firms have faced the costly and complex challenge of fully aligning these critical and far- reaching processes with costly, one-off custom integrations.  

An Oracle Approach

The wait for end-to-end automation is over.  OFSAA Regulatory Reporting features the Oracle Financial Services Data Foundation as well as a reporting portal that integrates Lombard Risk’s REPORTER Portal for final-mile automation.  As important, the solution ensures data integrity and frees firms to focus more time on analyzing and gaining new business insight from their growing stores of data instead of simply preparing data and reports with the sole objective of meeting submission deadlines. 

In addition, for the first time, multi-jurisdiction institutions, using these integrated tools, are now able to establish a global regulatory report production platform integrated with a single source of truth and full data lineage no matter where they are situated or how many jurisdictions they operate in.  The Oracle Financial Services Data Foundation has all the detailed granular data which are used to aggregate and populate the Lombard report templates.  This enables seamless drill down and lineage from individual template cells to the source systems where the granular data was sourced from.  The rules used to derive the aggregated and calculated data are also clearly visible.

A comprehensive data-driven approach to regulatory reporting backed by sound methodology is at the core of the joint offering from OFSAA and Lombard Risk.

Regulatory requirements will certainly continue to proliferate in the coming years.  Each additional initiative puts new pressure on the bottom line.  As such, financial organizations seek to drive costs out of the regulatory cycle wherever possible.  At the same time, forward-looking organizations see an opportunity to leverage rapidly expanding data stores to drive new business insight.  OFSAA Regulatory Reporting empowers financial services organizations to confront each of these challenges and move forward on a path of profitable growth. 

Ambreesh Khanna is the Vice President of Oracle Financial Services Analytical Applications.  He can be reached at ambreesh.khanna AT oracle.com.

Cliff Van Tonder is Global Alliances Director for Lombard Risk.  He can be reached at cliff.vantonder AT lombardrisk.com 

Be the first to comment

Comments ( 0 )
Please enter your name.Please provide a valid email address.Please enter a comment.CAPTCHA challenge response provided was incorrect. Please try again.Captcha