Singapore’s banks cite their ability to successfully implement the Monetary Authority of Singapore (MAS) Notice 610 as their main concern for next year. More than half of banks surveyed identify the regulatory change as their top single concern for the year ahead according to a new survey by Wolters Kluwer’s Finance, Risk & Reporting business.
The survey asked more than 50 compliance, risk, finance and IT professionals at more than 25 banks in Singapore for their views on key challenges they face.
The scope of new proposals in the Monetary Authority of Singapore’s overhaul of the MAS 610 reporting regime for banks has taken many in the sector by surprise. The core set of returns that banks file to the Monetary Authority of Singapore are being revised to require information at a far more granular level beginning next year. In fact, the number of data elements that firms have to report will rise from about 4,000 to approximately 300,000.
With this in mind more than a quarter (27%) of those surveyed pointed to having concerns around data analysis, gap identification and mapping, and data quality and remediation to meet the MAS 610 requirements, and seventeen percent (17%) stated their top concern for the next year was simply keeping up with the pace of regulatory change.
When asked what operating models they were considering for implementing new MAS 610 requirements, 82% of respondents said their preferred operating method was still traditional on-premise deployment.
The highest scoring consideration for choosing a technology solution was its data management capabilities, mirroring the 27% of respondents who ranked data analysis and quality their top concern for the next year. Unsurprisingly, price was the second highest scoring consideration. Content and reporting logic was the third highest scoring consideration. These responses are especially interesting in light of the concern for simply keeping up with the pace of change, a challenge where content and reporting logic can undoubtedly help.
“As this survey shows, regulatory reporting evidently boils down to two key challenges. Firstly, banks need to consider data management: obtaining the correct data in the required state for onward reporting,” said Wouter Delbaere, Director of Regulatory Reporting, APAC, for Wolters Kluwer’s Finance, Risk & Reporting business. “Subject matter expertise is the second concern: a deep understanding of MAS reporting requirements is vital. As banks are looking to leverage innovative operating models such as managed services, it is absolutely critical to not lose sight of these two key inherent regulatory reporting challenges.”
Earlier this week Wolters Kluwer revealed another major survey which showed the overwhelming majority of global banks are planning to integrate their regulatory workflow data. The survey, conducted in association with The FT owned Banker magazine, asked 113 senior level executives in risk, finance and compliance functions in banks across the world for their views on the data challenges they face.
Almost all (95.6%) respondents plan to integrate data across their regulatory workflows in the long term. When asked how integrated their regulatory workflow data currently is, a significant majority of respondents – almost eight in ten – revealed they had partially integrated this aspect of regulatory compliance, with plans in place for further integration. However, only 6% of respondents – the majority based in the Americas – have completely integrated regulatory workflow data. Just one respondent said its organization had not integrated and did not intend to integrate its regulatory workflow data.
Three-quarters of respondents also reported that creating an integrated and consistent view of data across the business was a major technological challenge. Just under half (46.0%) also pointed to integrating and merging technology as a significant challenge.
The survey also found that the top concern for banks is keeping up to date with the pace of regulatory change (55.8%), followed closely by keeping compliant with changing regulations and adhering to regulatory deadlines (54.0%). The same percentage of respondents cited data validation and reconciliation of regulatory data with risk and/or financial underlying data as a challenge. Worryingly, 41.6% said they found interpreting regulations a challenge, which could suggest that some firms are struggling to source the appropriate expertise.
Nearly 70% of respondents cited the integration of existing and new technologies as their primary technology challenge. The increasing focus on granularity by regulators means existing systems are no longer fit for purpose and financial firms must integrate new systems that can cater to these needs.
“As these surveys show the challenge for financial institutions lies in understanding not only one’s current regulatory framework, but also in analyzing the impact of new requirements once they are released, “ noted Bart Everaert, Market Manager, Risk & Finance, Americas, for Wolters Kluwer’s Finance, Risk & Reporting business. “Every new regulation triggers yet another need for complex change management. Rather than build internal systems and processes to fit a purpose in an ad-hoc manner, institutions need to learn how their existing processes can be adapted to meet each new regulatory change holistically and cohesively.”