The European Banking Authority’s take on compliance costs
The European Banking Authority’s take on compliance costs
A handful of useful facts:
- The report identifies 25 recommendations that can lower the costs of reporting compliance by 15-24%.
- Smaller institutions (which make up over half of the entire sector) can save 188-288 million euro overall
- The European Banking Authority will put emphasis on the use of technology solutions to lower reporting costs
- And with that said, we have the right tool in mind…
What is the buzz around regulatory reporting costs?
In 2020, the EBA explored and analysed the effectiveness of supervisory reporting, considering the many factors influencing the overall compliance of the banking sector. The analysis is based on the mandate laid out in the CRR, which requires the EBA to keep a close eye on costs of compliance and how to reduce them.
The study itself is a highlight on the reporting landscape of Europe, with the EBA conducting interviews with institutions across Member States to gather insights. Overall, the recommendations presented in the study span across four areas:
- The development process of the EBA’s reporting framework
- Changing the structure of reporting requirements
- Integrating data requests and reporting requirements
- Changing the reporting process with a stronger emphasis on the use of technology
The EBA data byzantine
The costs of reporting compliance for supervised entities have been the topic of discussion for the better part of the last decade. With the substantial pressure to deliver data quantity and quality, the EBA’s study found several key areas for improvement:
- Complexity
- The amount of data that needs to be reported
- Data extraction within organisations
- Frequent changes to the reporting framework.
An excerpt from the report indicates that the top ten biggest cost drivers are:
Source: The EBA’s report on supervisory reporting costs, p. 20.
Mixed feelings on technology support
The findings of the report indicate that the support of technology should in fact, act as the driver of combating costs of compliance, but there is widespread reserve towards using reporting tools, especially amongst smaller institutions. This is a result of many factors, among them lack of awareness on the available tools or inaccessibility of reporting software due to issues such as:
- Prices of tools and software
- Compatibility with the business model
- Unawareness of tools present on the market
- Challenges related to implementation
- High costs of updates and maintenance.
Interestingly, the report also found that many interviewed institutions indicate that they find the resubmission of data to be a significant driver in regulatory reporting costs. This is due to two main factors:
- The application of additional validation rules to data can potentially highlight other errors that require further manual revision and extend the reporting process even more
- Inability to calculate the overall costs of resubmission (most data is verified on many levels or manually).
Easy peasy lemon squeezy… we’ve got you covered!
As can be derived from the findings of the report, reporting compliance is no easy feat, and companies struggle daily to ensure that their data is up to par with reporting requirements.
But that’s exactly where a trusted technology partner can… come in handy. At BR-AG, we’ve used our regulatory reporting expertise to design a market-ready solution for creating and validating regulatory reports, ATOME: Particles.
A short glance at what you can gain:
We’re quick to implement any regulatory reporting changes.
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