Multiple and Changing Regulatory Regimes, Market Conventions and Business Definitions among Main Issues faced by firms
Wolters Kluwer Financial Services experts have released a whitepaper today examining the challenges faced by financial institutions when providing the granular operational data required for day-to-day business decisions, while meeting the increasingly stringent needs of senior management and regulators. The paper, entitled ‘Data Management – a Finance, Risk and Regulatory Perspective’, considers how firms should implement a best practice data management solution that ensures consistent data across the enterprise, and explores the benefits such an approach can offer, including:
• Yield efficiency benefits from the data itself
Within individual business units and geographical entities, a standardized data infrastructure can be an enabler for more tailored access to data and analysis. With a common vocabulary in place, individual entities can be sure of the data sets they are identifying, and can monitor them appropriately and interpret responses on the basis of who’s asking the question, whether it’s the finance, risk, trading, settlement or another department.
• Economies of scale
Adoption of a standard data infrastructure across domains means that both internal developers and third-party application vendors can implement solutions across the financial institution’s various business, regulatory or geographical silos. It becomes much more straightforward to expand successful projects across the enterprise, since interfacing to the data infrastructure would be easier ensuring that any new implementation is not in essence a matter of starting from scratch. Also, with a solution implemented across various silos, expansion of projects across an enterprise is far simpler, providing significant cost savings.
• Faster response times
A standardized approach to data management across activities can yield improvements in response times, addressing the emerging demand for faster access to risk and other information that can aid in the decision-making process. Firms are seeing the value of looking at broad exposures in a timely manner, and an automated set of processes based on standardized data can be the catalyst of achieving this.
“The usage of data within a financial institution differs from team to team, and this is complicated by regulatory differences – for example, risk departments following Basel bank capitalization rules will measure probability of default over a 12 month period whereas under IFRS, the finance department will look over the life of a product, such as a 20 year mortgage,” said Wolfgang Prinz, VP Product Management at Wolters Kluwer Financial Services. “The issues raised in this paper show the paramount importance that firms have standard data architecture to make this kind of distinction so that the data is meaningful to all potential recipients, while retaining the underlying consistency so that all users are working from the same base figures.”
Wolters Kluwer Financial Services’ data management capabilities help create a single, integrated data repository across the finance, risk and regulatory compliance functions, forming a structure for establishing a standardized approach. Its global regulatory data model integrates data for consumption at both the group level and the operational level, providing a consistent approach to data across the entire enterprise.