Regulatory Update – negotiating the web of compliance

The increasing burden of financial regulation has become the primary reason banks are unable to earn more than their cost of capital. Many of the most systemically important banks are struggling with compliance requirements for improved data aggregation, governance, architecture and processes.


Regulation is directed towards improvement in bank risk management, reporting and decision making practices, but banks are having difficulty in establishing data governance and quality assurance.
Many of the compliance problems banks are having relate to data architecture and its aggregation accuracy. ModelDR has system  tooling designed to run data quality  testing  that ensures accurate and complete data integrity governance.


Regulatory Update

The Basle Committee for Banking Supervision (BCBS) has detailed eleven regulatory Principles (BCBS239) the thirty most systemically important global banks (G-Sib30) must comply with by January 2016 . The eleven Principles are directed to wards

  • Governance (Principles 1 & 2)
  • Data Aggregation (Principles 3, 4, 5, & 6 )
  • Risk Reporting (Principles 7, 8, 9, 10, & 11)

BCBS conducted a progress survey with the G- Sib30 in January 2015. The survey focused on governance, infrastructure and data aggregation accuracy. However, progress results were disappointing, Many banks failed to recognize that infrastructure principles are pre requisites for compliance with other principles. The lowest reported compliance was for Principle 2 (data architecture).

Many banks are struggling with data governance and processes and rely too much on manual work arounds. Such work arounds and other duplicated processes raise concerns about the quality and integrity of reported data.

Banks face many compliance challenges.

Banks must enhance current IT architecture and data flows to reduce complexity and manual work arounds. G-Sibs commented that IT infrastructure, whilst adequate in normal times , was not adequate in stress or crisis situations. Banks cited incomplete data dictionaries and non integrated data taxonomies as major compliance challenges.