- A primary issue is the high volume of data that banks are required to collect, store, analyze, and report.
- The reporting frameworks can be complex and time-consuming for banks.
- Data visualization tools can help banks improve risk management practices, analyze customer behavior, and tailor products and services.
As the European Central Bank and European Banking Authority step up efforts to make data reporting more efficient for banks and financial institutions in the eurozone, visualization tools are becoming an increasingly important solution for the industry to improve its processes and meet regulatory requirements.
On March 18, the ECB and EBA announced the establishment of the Joint Bank Reporting Committee, which aims to simplify the data reporting process, develop common definitions and standards for the data banks must report, and reduce associated costs.
According to Mairead McGuinness, the European Commissioner for Financial Stability, Financial Services, and the Capital Markets Union, the initiative is an essential part of the EC’s supervisory data strategy and will streamline and modernize reporting for EU banks. “Supervisory authorities and the financial sector need to work together to deliver a reporting system that gives supervisors the data that they need while increasing efficiency and minimizing the burden for reporting entities,” McGuinness said.
While a more efficient process is a positive move, data reporting requirements are often considered a high-cost, non-value-added, and increasingly granular exercise for banks.
However, data visualization tools are set to revolutionize the industry – helping the sector meet regulatory requirements, harness a goldmine of data to create business opportunities, and develop meaningful insights for key decisions.
Key challenges for banks
Banks typically face several challenges in meeting regulatory requirements for data. One of the primary issues is the high volume of data that banks are required to collect, store, analyze, and report.
It can be complex, diverse, and spread across multiple sources, making it difficult for banks to manage. Additionally, regulatory requirements are constantly evolving, and banks must stay up-to-date with the latest guidelines and regulations to ensure compliance.
Another key challenge is ensuring data accuracy, as errors or omissions can lead to inaccurate reporting, which may result in fines, penalties, or reputational damage.
© Getty Images
Data visualization tools
Currently, Anacredit is one of the main regulatory reporting requirements for banks in the eurozone. However, in 2027, the ECB will introduce the Integrated Reporting Framework (IReF), which will focus on balance sheets, interest rate and securities holdings statistics, and granular credit data.
These frameworks can be complex and time-consuming for banks, as they are not template-based and lack efficiency, visualization tools, and deep data analysis.
However, solutions such as Business Intelligence (BI) and Data Visualization (Dataviz) tools can help banks adapt to new levels of granular data that central banks now require in several ways:
Data consolidation and integration: BI tools can integrate data from different sources and consolidate them into a single source. This can help banks manage the large volume of data required by central banks and ensure that it is accurate and complete.
- Data consolidation and integration: BI tools can integrate data from different sources and consolidate them into a single source. This can help banks manage the large volume of data required by central banks and ensure that it is accurate and complete.
- Data visualization: Dataviz tools can help banks visualize complex data intuitively and interactively. The solution enables banks to identify trends and patterns that may not be immediately apparent with traditional reporting methods, allowing them to make informed decisions.
- Data analysis: BI tools can provide advanced analytics and predictive modeling capabilities, enabling banks to gain deeper insights into their data and make better decisions. Banks will not only be able to comply with regulatory requirements but also improve their risk management practices.
- Automation: BI tools can automate many of the manual analyses and reconciliations that business users perform on reporting data, helping banks save time and resources and allowing them to focus on more value-added activities and services.
- Customization: they can be tailored for different banks and adapted to their activity, such as a bank operating in a single country.
How regulatory reporting data benefits banks
The data collected through regulatory reporting can be a valuable source of information that banks can use to make informed decisions and create business opportunities.
For example, banks can use the data to improve risk management practices by analyzing data on credit exposures, loan quality, and capital adequacy to identify potential risks and take steps to mitigate them. This can prevent losses and improve the bank’s overall financial health.
It can provide valuable insights into customer behavior, such as borrowing and spending patterns. This allows banks to identify customer needs and preferences to tailor their products and services and offer a more personalized service, giving them a competitive edge.
The data can also boost operational efficiencies, enabling banks to identify opportunities for reducing costs and improving processes.
Data visualization tools will transform the regulatory reporting landscape. It will enable banks to unlock the ‘goldmine’ that regulatory reporting data represents, such as driving business growth by leveraging advanced analytics, improving risk management practices, gaining customer insights, boosting operational efficiency – and gaining that much-needed competitive advantage.
© Getty Images
How Sopra Banking Software can help
In December, Sopra Banking Software was recognized as a Leader in the Chartis RiskTech Regulatory Reporting Solutions 2023 Quadrant.
Our Regulatory Reporting solution offers banks and financial institutions a comprehensive SaaS-based platform. With multi-country reporting and regulatory compliance capabilities, it leverages the latest technologies, including Business Intelligence capabilities, to deliver a seamless and efficient experience.
For more expert content on industry outlooks and innovation, subscribe to our newsletter or visit our Insights page.