Wolters Kluwer Promotes Central Data Warehouse Approach, with Integrated Finance, Risk and Reporting Function, in New Research

Technological innovations are enabling institutions to merge their Finance, Risk and Regulatory Reporting (FRR) functions into a set of processes to help meet the twin demands of regulatory compliance and a competitive commercial landscape. That’s according to new research (Integrating finance, risk and regulatory reporting through comprehensive data management) from Wolters Kluwer which illustrates how a dedicated FRR data warehouse that links risk, finance and other key functions to merge old systems with new ones, will provide banks with a competitive advantage by integrating finance, risk and regulatory reporting duties.

“One of the most challenging data management burdens facing banks globally is rooted in duplication,” Wolters Kluwer says in a statement. “The evolution of regulations has left banks with various bespoke databases across five core functions: credit, treasury, profitability analytics, financial reporting and regulatory reporting, with the same data appearing and processed in multiple places. This hodgepodge of bespoke databases simultaneously leads to both the duplication of data and processes, and the risk of inconsistencies.”

The idea, therefore, behind the integration of finance, risk and regulatory reporting functions is that sound regulatory compliance and sound business analytics are manifestations of the same set of processes. “Satisfying the demands of supervisory authorities and maximizing profitability and competitiveness in the marketplace involve similar types of analysis, modeling and forecasting,” comments Inga Rottmann, Vice President and Head of Global Marketing at Wolters Kluwer’s Finance, Risk & reporting business and one of the authors of the paper. “Each is best achieved, therefore, through a comprehensive, collaborative organizational structure that places the key functions of finance, risk and regulatory reporting at its heart.”

What’s more, the immense demands for data, and for a technology solution to manage it effectively, have served as a catalyst for a revolutionary development in data management, particularly as regards Regulatory Technology, or RegTech. Although the definition is somewhat flexible, RegTech is effectively the application of cutting-edge hardware, software, design techniques and services to the idiosyncratic challenges related to financial reporting and compliance.

But RegTech has also proved problematic. Many RegTech solutions currently on the market can be highly specialized and localized products and services from small providers. “That encourages financial institutions to approach data management deficiencies gap by gap, project by project, perpetuating the compartmentalized, siloed thinking that was the scourge of regulators and banks alike after the global crisis,” notes Will Newcomer, Vice President of Product & Strategy for Wolters Kluwer’s Finance, Risk & Reporting business and author of the paper.

Rather, Wolters Kluwer experts argue, banks would be well advised to build a centralized, dedicated and focused FRR data warehouse that can chisel away at the barriers between functions. And this is the case even at institutions that have been slow to abandon a siloed organizational structure reinforced with legacy systems.

The path to effectively transforming data management, the white paper continues, “is to combine tried and true processes and solutions with the selective deployment of new technologies with the target to remove undesirable duplication of both rules and storage.” Having clean, integrated and standardized data in one central warehouse confers advantages such as the elimination of data duplication and the elimination of analytical process duplication. And data lineage is crucial here, the white paper adds.

Earlier this year, ABN AMRO, the third largest bank in the Netherlands with more than 22,000 employees, announced it had chosen Wolters Kluwer and SAS “to provide a truly integrated finance, risk and regulatory reporting software solution.” The implementation of the software is part of the bank’s major transformation project, the Finance and Risk Architecture Alignment Initiative (FRAAI), which is designed to better meet increasing requests internally as well as from regulatory bodies for ever more granular or different data within shorter time lines.

“Better management of high-quality data and improved risk analytics are key pillars to meet the increasing need for control, intelligence and insight in the bank’s performance. At the same time the bank aims to optimize its IT maintenance costs, promote automation and increase the efficiency and agility of the finance and risk processes,” Wolters Kluwer said in a statement at the time. And the implementation of the software appears to be a real life example of the wisdom of integrating finance, risk and reporting functions.

ABN AMRO will also use Wolters Kluwer’s OneSumX for Regulatory Reporting, along with OneSumX for Finance and OneSumX Asset and Liability Management (ALM), ensuring an integrated approach to all finance, risk and reporting processes at the bank. The bank will also use SAS risk and finance capabilities. To ensure seamless integration and efficient integration of information, SAS and Wolters Kluwer will create an Exchange Layer to connect their respective software components.

“Integrating finance, risk and regulatory reporting is likely to be a long and arduous journey, but one that will help an organization get where it needs to go and become what it needs to be: a highly competitive business that has greater command of its commercial and supervisory environments and is better prepared for the future,” Rottmann adds. “Competitive pressures remain high, and regulators keep raising the bar for compliance reporting. They continually demand more data, more often, in finer detail and with greater accuracy. The industry and the technology that supports it strained until recently to keep pace, but that is changing thanks to developments in RegTech.”

Wolters Kluwer has received a number of recent awards, providing independent verification of its leading market position in integrated regulatory reporting. Chartis Research, for example, recently named Wolters Kluwer a Category Leader for IFRS 9 solutions, for the second year running, as well as a Category Leader in its Markets in Financial Instruments Directive II (MiFID II) Report. Wolters Kluwer has won a number of other accolades for its dominant position in regulatory reporting from the likes of Wealth & Finance International, FinTech Finance, Data Management Review and Corporate Vision magazine.