Today, compliance is an ecosystem that leverages real-time data. Its domain is broad, spanning customer protection, anti-money laundering, counter-terrorism, and regulatory reporting. At the latest Sopra Banking Summit, two experts at opposite ends of the spectrum (yet connected) discussed the topic: Sebastien Polese, General Manager of Reporting & Risk at SBS (ex-Sopra Banking Software), and Stu Charlton, Experience Strategy Director at design consultancy cxpartners.
A different approach to compliance
Some of cxpartners’ clients are in the financial services sector, where the regulator has a strong influence. The consultancy keeps that in mind, learning how to design well for customers, believing they should be part of the ecosystem.
That being said, many organizations typically respond defensively to compliance, and sometimes the customer is forgotten. An exciting change Stu Charlton has seen in the UK is the regulator – the Financial Conduct Authority (FCA) – encouraging businesses to focus on what really matters: achieving good outcomes for customers. To facilitate that, they introduced the Consumer Duty, “setting higher and clearer standards of consumer protection across financial services and requiring firms to put their customers’ needs first”.
But at the moment, the way many organizations structure themselves is hampering progress. Some teams protect the business from regulatory risk, while others are tasked with growth and pursuing commercial objectives. The two elements feel at odds – pulling in different directions, creating tension and dysfunction.
A marketing director at a global insurance company backs that sentiment up: “The compliance challenge goes across everything. You end up gold-plating everything to try and make it as safe as you possibly can. Things take longer, cost more, and you get in the way of the customer.” When regulations designed to improve things for consumers make them harder, it’s a sign something isn’t working,
As part of the Consumer Duty, the FCA is striving to become “ever more outcomes and data-driven, meaning focusing on results over processes, and ever more attuned to the needs of customers”. Stu Charlton says this customer-centricity moves away from a checkbox approach to compliance toward a model based on principles rather than rules.
However, it requires a mindset shift from the top down, baked into the operating model. Once achieved, Stu Charlton believes firms are best prepared for regulatory change. “That’s when compliance starts to feel like an opportunity to build trust again,” he adds.
It’s worth noting the issue is widespread. Indeed, according to EY’s 2023 Global Financial Services Regulatory Outlook, “Difficult economic circumstances around the world are pushing conduct regulators to widen their focus beyond financial inclusion, to the broader concept of customer impact.”
Regulatory reporting 101
On the other side of the coin is regulatory reporting. When it comes to FIs, this involves providing financial data to central banks. There are four main categories: accounting, prudential, statistical, and transactional. Approaches differ by country, but the trend is toward a common and more rationalized use of data. However, with varying historical national requirements, the journey isn’t smooth. As Sebastien Polese says, the objective is the same, but the path often differs.
There are several reasons for regulatory reporting, including:
- Allowing central banks to understand the activities of FIs and make decisions to better stabilize the financial sector.
- Evaluating the risk taken by banks and trying to mitigate what’s taken on globally by the market.
Regulatory challenges facing banks
Since the 2008 crisis, regulatory requirements have been on the rise. Over the last decade, there’s been a real acceleration regarding data quality and volumes and the sheer number of reports banks have to provide.
Sebastien Polese cites two examples:
- Finalization of European risk conventions, culminating in revised technical standards and new rules: CRR3 and CRD6.
- New European Central Bank (ECB) principles, like the Integrated Reporting Framework (IReF).
He believes these changes will require banks to leverage new tools to process increasing amounts of data.
SBP Regulatory Reporting: accurate, efficient, and hassle-free
To meet requirements and challenges head-on, SBS unveiled a next-generation regulatory reporting solution in March 2024. Integrated into its Sopra Banking Platform (SBP) and designed to streamline and simplify compliance processes, SBP Regulatory Reporting offers many benefits, including:
- Cloud-native and microservices-oriented
- Adapts to diverse requirements and changing regulations
- Scales up and down with ease
- Automates tasks: data collection, plus report generation and submission
- Unified reporting experience
- Real-time regulatory insights via powerful analytics
- Reduces data processing from days to minutes in some cases
Perhaps most important for Sebastien Polese is the significant total cost of ownership (TCO) savings. To achieve that, the solution provides maximum performance when needed – usually a precise reporting period – while the rest of the time, it downscales and is less expensive. This control and visibility is invaluable.
The low code framework enables business users at banks to add new internal controls quickly and easily. Meanwhile, a unified data collection layer avoids the silo effect, allowing banks to capture information automatically and check the quality – a single source of truth.
Bridging the gap between consumers and compliance
As the financial services landscape evolves, regulatory reporting and customer-centricity are increasingly linked – moving in the same direction rather than pulling against each other.
When it comes to reporting, banks require a transformative solution that simplifies and speeds up processes, reduces costs and manual tasks, supports customization, and has a proven track record.
For more information about our cutting-edge solution, head to the SBP Regulatory Reporting page.
Listen to the “Fortifying compliance: automate banking defenses” session here, and for more expert content, browse our Insights page.