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Sunday, April 24, 2016

Is your data ready for Regulatory Reporting?

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"War is ninety percent information" - Napoleon Bonaparte, French Military and Political Leader

With FATCA Reporting already in progress, the next big regulatory programme that all Financial Institutions (FIs) are busy with is "CRS" (Common Reporting Standard). CRS, is a standard for automatic exchange of information between endorsing countries and is proposed and developed by "Organisation for Economic Co-operation and Development" (OECD). On the outset of CRS, the readiness of your data is very much important for rapid report development.

Image courtesy: pixabay

In many organisations, very little importance is given to data until there is a watchdog comes into the picture asking for regulatory reports. Once, it becomes mandatory for an organization to send the reports to watchdog, the organization will have a mountainous task at its front. A leading financial institution approached us with a common problem that might be applicable to its peers. It was not a surprise to us, as its usual for us to see organisations storing their data in conventional ways (excel sheets and notebooks etc.,).

Major challenges in Reporting data that is not in the required format:

  • Information stored in excel sheets at different locations by different people in different structures. Sometimes, a company that operates from London will have a structure that will be different from its branch operates from Singapore.
  • Unstructured Data - information is stored in different formats with little knowledge about reporting requirements that might come in future
At the time when everyone realise that the data is not in the required format, the timeline for regulatory reporting makes it even more difficult.

How to approach the challenges?

  1. Bring all stakeholders/parties into a forum to discuss the differences in their formats. Use "Questionnaire" as a tool for your information gathering sessions to keep it short and to help the participants for easy understanding. 
  2. Reporting elements shall be categorised into the following major categories
    1. Validated - Elements in this category will be validated at the receiving end. Such as Postal Code, Country Code, City Name and Date (format)
    2. Mandatory - This category of element is required, but not necessarily validated at the receiving end. Such as customer name, free text address
    3. Optional - Elements in this category shall include those that is not 
    4. Not Required - Elements in this category are not reported
  3. Design a common template based on the category of elements
  4. Validate the common template by inviting different stakeholders to participate in entering the information in the new format
  5. Rollout the new template to all stakeholders and monitor the data entry (one time exercise); Archive the old data format preferably in the head office or in the data center.

How to prevent this issue from happening?

    1. Always encourage people across departments, branches and geo-locations to use a common template to capture the information. 
    2. Any specific changes with respect to the countries or branches shall be tailored without affecting the structure of the template.
    3. The common template shall remain protected in the head office and the people from different location should approach the head office for any changes.
    All Institutions must understand that storing information in structural format is inevitable in this age of information and it is not "just data" anymore.

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