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The Regulatory Reporting Maturity Model
The Regulatory Reporting Maturity Model

July 5, 2021

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The 2008 global financial crisis led to significant regulatory changes for systemic risk identification and management, enhanced capital adequacy and liquidity requirements, and effective supervisory oversight through the collection of more comprehensive, more granular and more frequent reports/data by regulators.

Today, the advancement of FinTech has created a variety of new players further fragmenting the financial services market and posing fresh challenges to the financial ecosystem. Regulators are responding to this emerging paradigm by testing new frameworks, and redefining regulations where needed. More importantly, regulators are adopting technologies that can help them quickly respond to market changes while not stifling innovation and competition. This will lead to an era of increased regulatory changes and supervision.

Banks and financial institutions need to make RegTech their strategic priority, establishing a solid foundation and framework to cope with the dynamic regulatory environment marked by evolving regulations and rapidly developing technologies.

Regulatory reporting forms a very important part of RegTech. Regulatory changes, innovation and technological advancements are expected to accelerate the next phase of regulatory reporting evolution, which many are terming as Regulatory Reporting 3.0.

It is imperative and imminent for financial institutions to steadily progress through the regulatory reporting maturity model, with the ultimate goal of attaining the self-optimized maturity level which broadly has the following characteristics:

People:

  • senior management fully involved in driving regulatory strategy, making compliance and risk management part of the culture;
  • dedicated business user bandwidth with clearly defined ownership and service levels for regulatory reporting process

Process:

  • regulatory requirements and systems fully integrated into the business process, system architecture, devops process and management information within the enterprise such that the impact of every business or system change on regulatory compliance and risk management is managed by design;
  • enterprise data architecture which is fully integrated, always kept up-to-date and published

Technology:

  • regulatory platform that has access to this complete, comprehensive and timely enterprise-wide data;
  • regulatory compliance oversight enabled with realtime compliance dashboard, horizon scanning and change tracking/ management to to quickly respond in a dynamic environment;
  • regulatory solution that is intuitive, low-code, self-service based, with straight through process and review process, giving users the end-to-end ability to review data, enrich and curate data, generate and validate reports, attest and publish

Reaching the highest level of maturity will not only be about achieving high levels of automation and meeting ongoing regulatory reporting requirements, but also about internalization of a vision where regulatory technology enables comprehensive risk management, and becomes a differentiator, where the regulatory technology team collaborates with the business teams to find distinct advantages and opportunities through the advancemcent of technology and evolution of the ecosystem.

As depicted in the maturity model, the senior mamagement's intent pulls along the organization towards execution and attainment of the next maturity level of regulatory reporting, and correspondingly produce outsomes as outlined.

Intent to execution, execution to outcome!

 


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