Following the financial crisis of 2008, banks are having to face much more stringent regulations. The Basel III regulations are continuing to put pressure on banks to derive their regulatory calculations and reporting requirements from a single, and consistent set of data. Basel III focuses on the framework’s enhanced capital requirements, which are intended to improve the quality, consistency, transparency and quantity of capital held by banks.
Basel III has also introduced two required liquidity ratios: (1) the Liquidity Coverage Ratio (LCR) requires a bank to retain sufficient high-quality liquid assets to cover its total net cash outflows over 30 days; (2) the Net Stable Funding Ratio (NSFR) requires the available amount of stable funding to exceed the required amount of stable funding over a one-year period of extended stress.
Simplity’s leading consultants in risk management and banking regulation, combined with its well-established partnerships and demonstrated technical ability, can assist our clients to address these important regulatory requirements, and thus conform with Basel III, whilst measuring, monitoring and managing risk effectively and efficiently.
Simplity’s renowned experience, with its prestigious clients in the banking industry, clearly demonstrates our competency in assisting banks in facing the latest regulatory challenges and finding exacting solutions, as exemplified by Simplity’s Liquidity Management Projects (LCR, NSFR reporting). For more information, please examine Simplity’s BOI Case Study (add picture of pdf with link to actual pdf: Case Study BOI)
Following the global financial crisis of 2008, it became clear that banks’ information technology (IT) and data architectures were inadequate to support the broad management of financial risks. The latest BCBS239 compliancy self-assessment by 30 G-SIBs has shown that banks are least compliant in Principle 2: "data architecture/IT infrastructure". The main stated reason for this has been the lack of availability of data taxonomies and poor data ownership.
Simplity’s agile Business Information Modelling methodology provides a unified language for all areas across group and business lines. The integrated Accurity Glossary provides clear and comprehensive documentation for taxonomies, mappings and, consequently, lineage and traceability, i.e. a transparent audit trail.
To comply with BCBS239, data quality management, including data profiling, data lineage, monitoring, reporting and escalation procedures, must be established. Simplity’s Accurity Quality product enables clients to profile, monitor, control and report data quality and related events through an integrated technology platform.
There is an increasing number of reports required from banks for monetary policy, financial stability and supervision purposes; their data requirements are becoming more and more granular and complex. Banks are left on their own with a costly and time-consuming process to interpret the new reports, leading to questionable quality of the output data and more difficult comparison between banks.
As a result of an ESCB working group (GRISS) initiative, the Banks’ Integrated Reporting Dictionary (BIRD) was designed. BIRD will alleviate the reporting burden for the banks by offering a harmonized data model as well as clearly defined transformation rules to be applied to the data extracted from the banks’ internal IT systems to fulfil the reporting requirements.
BIRD is not an IT tool, but rather a set of documentation. Banks will need tool support such as Simplity’s Accurity Glossary to manage the data model and dictionary, as well as the mappings to source systems. Also, BIRD does not take over the responsibility for the correctness of data, therefore, banks will still need to oversee and manage data quality, and will thus require respective tool support to profile, monitor, improve and report data quality. Simplity’s Accurity Quality assists banks in performing quality measurements of all types of data, displayed in customizable dashboards, allowing drill through to track problems to their sources.
Learn more about BIRD.
Regulatory requirements such as Solvency II have put increased regulatory pressure on insurance companies. Core components of a Solvency II implementation initiative are effective data management and an integrated IT system. Meanwhile, data quality requirements remain a major challenge, and a risk, for many institutions to meet compliance deadlines.
Simplity’s consultants, with hands-on-experience in the insurance business, combined with its well-established partnerships and technical ability, can help our clients to adapt to new regulatory and risk requirements, enabling the institution to minimise cost, and to optimise revenue and profitability. Simplity’s Accurity product family supports the EIOPA’s data quality requirements, for which companies should provide data quality management across the entity. The Simplity Glossary product assists, primarily, in the compilation of a directory of data attributes used in the internal model, stating each attribute’s true source, characteristics and usage, ensuring that data processing from source to model is transparent, traceable and auditable. Simplity’s Quality product runs checks for completeness, accuracy and propriety of data. From periodic data quality assessments, Simplity can help institutions to implement a process for identifying and resolving data deficiencies, and to document instances where data quality may be compromised, including implications and mitigating actions.
IFRS 9 brings together the classification and measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS39.Through the application of one classification approach for all types of financial assets, the new classification and measurement approach of IFRS 9 improves the ability of users of financial statements to understand more clearly the information concerning the amounts, timing and uncertainty of future cash flows.
With the introduction of IFRS 9, banks will be required to amend the calculation process of credit impairments. Instead of the current “incurred losses”, banks will need to introduce models to calculate “expected credit losses” (ECL) for future expectations, both on individual- and group-asset level. To achieve the level of data granularity required for the IFRS 9 impairment process, the impairment credit risk model should be augmented through the inclusion of additional data attributes and appropriate corporate governance structures; these enhancements should subsequently be put in place in the related systems and processes.
The improved hedge accounting model in IFRS 9 is designed to improve the link between the economics of risk management and its accounting treatment.
Simplity’s consultants in risk management and banking regulation, combined with our well-established partnerships and demonstrated technical ability, will enable our clients to address these issues in order to meet the January 2018 deadline for compliance with IFRS 9.
MiFID II will introduce far reaching reforms to market practices which are being implemented to strengthen investor protection and to facilitate fairer, safer and more transparent markets. The new regulations will have a significant impact on financial institutions from the perspective of their strategy, operating models and technology.
MiFID II’s pre- and post-trade reporting rules will require an integrated, data-driven decision process at the front end to comply with the required reporting at allocation level, unlike the block level reporting requirement in MiFID I. Since there is a considerable overlap between the reporting fields across AIFMD, EMIR and MIFIR, ensuring consistency across all reporting is crucial.
Simplity’s consultants, with their in-depth experience in risk management and banking regulation, combined with well-established partnerships and technical ability, can help your institution focus on two key aspects to meet the deadline for compliance:
1. the establishment of a taxonomy and dictionary of risk data to maintain a comprehensive business information model (structured representation of data requirements, common language for business and IT, business and technical metadata) across the group and business lines;
2. the implementation of best practices for data management across the business, i.e. providing data governance to address data quality, data policy management, business process management and risk management related issues.
Simplity’s Accurity product family can assist your institution to establish a new system, or the enhancement of your existing system, with new data attributes to achieve a robust data repository and the related data quality.
The Foreign Account Tax Compliance Act (FATCA) is a set of rules and regulation requirements for United States persons (citizens and residents), including those living outside the US, to ensure that those individuals report all income earned outside the United States. FATCA is having a significant impact on financial institutions’ data gathering and processing capabilities, since the requirements go far beyond data currently collected through KYC or CIP processes to classify customers on a global basis. Institutions with multiple business units need to make sure that this data is harmonised across their global operations.
Simplity’s experts can assist your institution in the implementation of the relevant regulation and reporting requirements based your local regulator standards, aligned with FATCA requirements, in order to gain adequate, precise and detailed information about your institution’s US clients. Simplity’s Accurity product family provides a harmonised data repository across the institution and ensures excellent data quality.
For more information, please refer to Simplity’s Case Study (add picture of pdf with link to actual pdf: Case Study CSAS)
The digital revolution has enhanced the ability to conduct business, but it has also created a complex set of security issues. Studies reveal that 8-10 percent of a bank’s loan loss is actually the result of fraud, but this has been misclassified as ‘bad debt’.
The market is now at a tipping point where cybersecurity operations are starting to transcend tactical ‘monitoring’, and become significantly more sophisticated.
Technology advances in multiple areas, including: high-speed access to abundant datasets (threat sharing, real-time network traffic, unstructured business data), innovative automation (analytics, machine learning, visualisation), and evolving forensic and incident response tools, are driving this sophistication. Simplity understands that institutions now need to have the mindset that being compromised and breached is just a matter of time, not if, but when? With Simplity’s combined capabilities and experts, we are preparing a number of enterprising solutions which will shield against a cyber-attack prior to and beyond the expected breach.
Banks are expected to demonstrate that they understand their customer base and that they have considered the associated risk of their customers. To help financial institutions of all sizes, we at Simplity always think about how these institutions may enhance and transform their Know Your Customer (KYC) programs, reaping the regulatory dividend, i.e. using data collected in the KYC context for 360 degree customer view and CRM purposes.
Simplity always cares about policy (the foundation program which defines the objectives), procedures (instructions how the policy objectives are met, e.g. client identification or verification, client due diligence), data standards (principles for collecting, storing and analysing data), and about customer risk scoring (risk based assessment of each customer). After setting up these determinants, Simplity’s Client will have the ability to mitigate the money laundering criteria across the financial institution.