Banks ill-equipped for proposed APRA data demands

Tech not up to possible changes in Australian Prudential Regulation Authority regulatory requirements, survey suggests

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Australia’s Authorised Deposit-Taking Institutions (ADIs) have inadequate technology infrastructure to meet the demands for higher quality data reporting being proposed by their regulator, a recent survey suggests.

The Australian Prudential Regulation Authority (APRA) issued a discussion paper in January sharing its plans to improve the quality and accuracy of data it receives from ADIs (which covers banks, building societies and credit unions) and registered financial corporations.

“The collection must be modernised,” APRA said in the paper.

But the proposed changes are proving a headache for the industry, a Wolters Kluwer survey taken this week suggests.

“Compared to other jurisdictions in the Asia-Pacific region, Australia’s reporting requirements were traditionally considered as being relatively straight-forward: the figures to be reported were high-level, the submissions were infrequent and requirement changes were rare,” said Wouter Delbaere, market manager of regulatory reporting for APAC at the information services firm.

“It is therefore no surprise that many ADIs were able to get away with a tactical, largely manual approach to regulatory reporting in the past,” he added.

Three quarters of the more than 30 ADIs surveyed said they were currently taking an approach which is either completely manual or only partially automated – typically via internal Macros. Only four per cent of respondents took a vendor automated approach and 21 per cent an in-house automated approach.

“There is clearly some comfort in sticking to established procedures, and manual spreadsheets are not without advantages; they enable business users, for example, to easily visualise and organise data,” Delbaere says. “But this flexibility is prone to human errors and comes with numerous control risks, a price which many are no longer willing to pay with the economic and financial statistics changes recently introduced by APRA.”

Dodgy domestic data

APRA administers the data it gets from ADIs – previously known as the domestic books collection, and now referred to as the economic and financial statistics collection – on behalf of the Australian Bureau of Statistics and the Reserve Bank of Australia.

“The data collected from ADIs and RFCs are used to compile key macroeconomic indicators for Australia and are used for analysis and policy purposes by the RBA. Aggregated data are used by other economic policy makers and to meet Australia’s international reporting obligations,” the APRA discussion paper noted.

Yet data resubmissions and inaccuracies were too frequent, APRA said, “some of which have been of sufficient magnitude and importance to complicate the analysis of significant policy issues”.

A majority (82 per cent) of the ADIs surveyed said they will either change their current approach or are considering more strategic alternatives for complying with new regulatory reporting demand.

Some of those changes of approach concern the proposed data collection’s use of XBRL (eXtensible Business Reporting Language) and the Standard Business Reporting (SBR) taxonomy.

Ultimately, the overhaul – the first phase of which has been proposed to end by July next year – will reduce the reporting burden of ADIs, APRA said, and help government institutions make better policy decisions and financial estimates.

Delbaere added ADIs that make necessary changes early were likely to see benefits.

“Firms who are prepared to adapt their technology infrastructure and regulatory reporting approaches now will have first mover advantage in the new regulatory landscape,” he said.

Written submissions on the APRA discussion paper must be made by April 18.

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Tags building societyinfrastructurecredit unionapraAustralian Prudential Regulation AuthorityReserve Bank of AustraliaAustralian Bureau of Statisticsbanks

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