Data: Common currency of the regulatory reform agenda
David Wright, Managing Director, Banking & Securities Regulatory Practice, Deloitte & Touche LLP
For financial institutions, 2015 promises to be yet another challenging year of ongoing financial reform implementation. Rather than facing new items on the regulatory agenda, institutions will focus on the continued build-out of the IT and risk-management infrastructure needed to meet the heightened expectations surrounding capital, liquidity, resolution plans, and compliance. At the same time, regulators will be placing even greater emphasis on improved governance that has adequate checks and balances and that reinforces an ethical and compliant culture. Institutions will also be expected to continue to upgrade their cyber security infrastructure and ensure that their financial reporting is accurate and true.
As financial reform efforts more fully mature, institutions are recognizing that the quick fixes and ad hoc approaches in the early years of reform implementation are in need of rationalization and automation for them to be sustainable on a business-as-usual basis. As regulators push for attestations on accurate and true reporting of regulatory reports and stress-test results, for example, institutions are recognizing that reducing the amount of manual processes and other areas prone to human error can save costs and improve accuracy and reliability over the long run.
Indeed, the common currency of the vast majority of the regulatory reform agenda is the availability and delivery of accurate data. For example, high-quality granular data is needed to deliver daily liquidity information and analytical reports that cover all of a firm's legal entities for both internal and regulatory purposes. The appropriate data feeds, often at the transaction level, are needed for the flexibility of aggregating credit risk exposures across the firm in myriad ways for the consumption of corporate risk, the board's risk committee, and regulatory bodies. Clearly, data and the related analytics are the essential ingredients to risk management and broader governance of 21st century financial institutions.
As firms enter the latter phase of reform implementation, they should reflect on whether their IT infrastructure and their data governance process are sufficiently robust to address the ever-escalating demands of risk professionals and the firm's regulators. Ultimately firms will need to shift their focus from just getting through the next 12 months to investing in infrastructure that can get them though the next five to ten years in a more sustainable, cost-effective, and reliable way.
Peggy Bresnick Kendler has been a writer for 30 years. She has worked as an editor, publicist and school district technology coordinator. During the past decade, Bresnick Kendler has worked for UBM TechWeb on special financialservices technology-centered ... View Full Bio