#Risk, Regulation & Reporting

Managing changes in regulatory reporting

Nov 19, 2020 - 4 min read
Hayat Bliha, Senior manager of practice compliance at Sopra Banking Software

The first quarter of 2020 saw all banks obliged to submit crowdfunding declarations in Morocco. Other changes to fund transfers (both national and international, whether sent or received) were then introduced in the second quarter of the same year. What’s more, the development of new standards led regulators to request increasingly frequent regulatory reports – despite the fact that the number of reports had already increased by 80 percent between 2006 (the first FINREP and COREP reports) and 2016.

As Morocco is forced to deal with the consequences of the public health crisis, we must now design a more efficient reporting model adapted to the current phase of global economic transition. During the lockdown period, the country’s crowdfunding banks suffered considerable losses of around 10 billion dirhams (914 million euros) in outstanding debts. This loss has been reflected in the limited development of crowdfunding initiatives (6 percent in 2019 compared with 3.8 percent between January and April 2020). As surveillance is the main responsibility of regulators, reporting proves to be an indispensable normative tool as part of a process of stable, coherent development within a constantly changing ecosystem.

The quality and effective processing of data is now more necessary than ever for banks to be able to meet regulatory demands. These institutions must ensure they share collected data within a set time while also guaranteeing its quality – which is essential for regulators to carry out their work. Finally, banks must take into account the issue of harmonizing all data they send by providing regular reports on different periods, which are subject to a variety of aggregation requirements. As a result, data collection and quality have become a major challenge in the production of these reports.

In an effort to tackle this issue, banks must therefore:

  • Improve data coherence and quality within their information systems (IS) by relying on a single, shared source – a sole frame of reference
  • Introduce a data verification mechanism in both the prior and post phases. In the case of non-conformity, roll out initiatives to increase reliability
  • Establish a permanent audit system for regulatory data and attributes
  • Eliminate manual processes and automate the chain from start to finish, from data extraction to report completion, while including an auditing mechanism

In an effort to ensure the quality of financial data and anticipate the system’s future needs, banks are forced to establish solid processes based on a robust IS architecture. This is an obligatory step if banks hope to remain compliant with upcoming regulatory standards.

A regulatory monitoring strategy also seems to be inevitable to efficiently comply with new standards that could be introduced rapidly. What’s more, this would be an effective tool for anticipating subsequent changes in both data and automation. This monitoring effort would imply remaining attentive to regulators while frequently taking part in different regulatory committee meetings.

With this in mind, Bank Al-Maghrib has shared an ongoing project to enact changes to the declaration format of all stages in the process, shifting to an XBRL to replace the traditional “Remote Sending” and “File” methods. The project is set for completion by 2022.

In light of the current situation and the consequences of the Covid-19 epidemic in Morocco, regulatory reporting is an essential tool for processing and analyzing the increasing amount of data. However, banks must learn to use it immediately, as new standards set to appear alongside current regulations are already being planned. One thing is certain: in Africa and across the world, data is now one of the cornerstones of financial and economic objectives. This is therefore the perfect time to take charge and become part of an ecosystem that is set to change in the coming years.