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Preparing Europe's banks for Common Reporting and Financial Reporting

Read how European banks and institutions can prepare for COREP and FINREP’s looming changes to harmonized supervisory reporting standards.

Overview

In January 2014 a new European reporting framework aiming to harmonize supervisory reporting standards will be in place for banks and institutions across the EU. The standards, Common Reporting (COREP) and Financial Reporting (FINREP), will create challenges in three main areas: organizational, operational and in process, IT and infrastructure.

Accenture provides steps for preparing for COREP and FINREP, offering insights and guidance to organizations faced with navigating complexities arising from the new reporting requirements.

Background
In 2006 the Committee of Banking Supervision (CEBS) created guidelines for reporting standardization across the European Union (EU). The goal was to increase financial report comparability, increase supervision cost-effectiveness, reduce stress on cross-border credit organizations, and remove obstacles from market integration. Those guidelines are slated for enforcement from January 1, 2014, and pose potential challenges to EU financial institutions—specifically relating to organizations, process, IT and infrastructure.

Institutions facing these challenges cannot underestimate the hurdles they potentially face around having the right data at the start of the process and forming contingencies for any changes that may still occur in the new reporting strategy. By familiarizing themselves with Accenture’s recommendations, banks and organizations can weather the changes, and apply a long-term view of how they can build internal data models in an increasingly complex regulatory reporting environment.

Key Findings

With regulated European Union financial institutions facing a January 1, 2014 adoption date for new standardized reporting framework guidelines—Common Reporting (COREP) and Financial Reporting (FINREP)—Accenture has identified some challenges posed by the regulatory change.

The challenges are grouped into three categories: organizational, operational and process, IT and infrastructure.

Organizational challenges involve data mapping and modeling concerns, and issues with regulatory interpretation. Operational factors focus on report management and update consistency. As for process, IT and infrastructure, issues with data mapping and modeling arise again, specifically with fragmented data warehousing and timing issues with third party software needs for report production, among other factors.

Recommendations

As banks come to terms with the challenges surrounding COREP and FINREP compliance, Accenture’s experience in the area, program management skills, and specialized toolset provide valuable guidance and resources to institutions untangling the web of changing requirements.

Accenture suggests taking six major steps in preparing for COREP and FINREP:

  1. Accurate interpretation of European Banking Authority (EBA) rules.

  2. Understanding technical points and complexities of Data Point Model versus individual reporting.

  3. Addressing data management issues by designing business processes to handle increases in data volume.

  4. Creating robust validation checks to adhere to EBA rules.

  5. Enable vendor management to produce final outputs from source IT systems.

  6. Understand IT infrastructure limitations to handle future changes to EBA templates.

Industry & topics highlighted

Financial Services