Not long ago, the financial system was shaken to its foundations due to a series of events that led to a paradigm change - the subprime mortgage market depreciation in the United States, followed by a significant Wall Street fall that led to a severe economic crisis, was considered by many economists as the most severe financial crisis since the Great Depression.
Proactive measures were implemented, and regulators increased their focus on risk prevention, challenging banks to deal with overly complex ever-changing regulatory requirements across multiple jurisdictions.
Implementing national and increasingly international regulatory requirements reflects on banks’ margins and cost structures. The time spent on manual work and repetitive tasks, practical implementation issues, running costs, and headcount requires a level of investment that is not sustainable in the long run.
Regardless of size, all businesses must negotiate their way through a labyrinth of regulatory changes and comply, for the next few years, with a roadmap of new regulations. For multinational institutions, there is still the issue of the effort needed to comply with the same regulations in different geographies.
Regulatory burden leaves organisations with less time and money for their actual business activities, especially innovation.
When thinking about a Regulation lifecycle, there are typically three phases – Awareness, Implementation and Compliance. In this approach, information is not used to benefit banks; it is simply reported.
Furthermore, the same information is reported to different regulations, being there no synergy between them. This can lead to data gaps, consistency issues between internal systems, and overall inefficiency.
We believe there are clear synergies in shaping prudential and compliance requirements towards regulatory reporting through a common framework, a single source of data for regulatory reporting, which allows the harmonisation and elimination of redundancy and discrepancies when reporting the same data set across different regulatory reports.
In this context, it becomes increasingly essential for organisations to look at compliance from a different angle, shifting from an obligation perspective to a strategic one. The next step is to predict compliance problems using analytics and AI features, establishing an automated surveillance system that automatically detects anomalies and brings them to human attention (e.g. detecting potential money launderers and fraudsters).
Celfocus Regulatory Compliance Solution helps Financial Institutions address both current and future regulatory reporting requirements and reduce operational costs – it can act as a single vehicle between bank information and the regulator, where data is integrated and disseminated.
Data is aggregated from risk and finance applications into a single platform leveraging capabilities ranging from data collection to analytics.
This offers Regulators a holistic approach to manage prudential and supervisory risk effectively, and Financial Institutions the ability to comply with reporting obligations cost-effectively
Chief Risk Officer
The solution’s automated processes reduce the number of errors and improve data quality, saving money and enhancing the production process.
Head of Compliance
The processes automation mean complying with internal & external demands such as statutory requirements.
Head of IT Reporting
Increasing productivity by employing automation while reducing the time taken to perform repetitive tasks.
Newer technologies have been arising to address and facilitate the delivery of regulatory requirements, leading to the emergence of a new industry domain - RegTech. Financial Institutions have been using RegTech solutions to tackle increasingly complex and costly, yet similar, problems and challenges of managing regulatory change, compliance, and risk.
The requirements increased the need for efficient and effective monitoring, and financial authorities are seeking to leverage the same technological innovations as commercial institutions, including data analytics, artificial intelligence, and machine learning to tackle their major market challenges.
Supervisory Technology (SupTech) helps supervisors achieve their objective of promoting trust by economic agents in Financial Institutions and markets. As with other RegTech solutions, SupTech solutions use process automation and data digitalisation to streamline compliance procedures.
Celfocus has developed and deployed a technological accelerator for Regulators – a blueprint that accelerates procedures and customises the requirements of each country while empowering the Central Bank.
The platform is flexible and scalable reducing time-to-market for new regulation and providing a tailor-fitted solution that matches the Regulators’ needs in terms of data requirements.
Celfocus Accelerator is designed to fully support the main data flow in a RegTech and SupTech context:
