February 2020

Data Integrity is Essential for Accurate Regulatory Reporting

Data integrity is a fundamental part of regulatory reporting. Duco enables firms to quickly set up robust and flexible data integrity checks and reconciliation controls that can scale and adapt over time.

By Chris Peacock, Head of Marketing

Since the financial crisis, the regulatory burden of financial institutions has been growing year-on-year. The regulators have been getting tougher on compliance breaches too, and 2019 was a record year for fines.

In terms of regulatory reporting, new reporting fields require data to be gathered from numerous internal and external sources. Data from front office systems needs to be enriched, sometimes several times, before the final aggregated report is sent to the regulator. As this data flows through the organisation, there’s the potential for data loss or error at every step.

At the same time, firms trading in multiple jurisdictions are required to keep on top of a whole host of regulations, including MiFID II, EMIR, Dodd-Frank, SFTR, MAS, HKMA and ASIC just to name a few.

Traditional data integrity tools for these jurisdictions tend to be based on a rigid structure for a specific regulation. This is fine for reconciliations and controls between the final reports and the data held by the regulator, but tends not to work so well when reconciling between internal systems. The data here is often in a variety of formats and doesn’t fit the defined schema.

In this instance, firms will fall back on manual reconciliations or point-to-point solutions to plug the gap. The result is that firms have multiple disparate controls, significantly increasing both cost and risk. The information submitted to the regulators often looks different to the original source data and there is no acceptable audit trail to explain the difference.

A holistic approach

At Duco we believe the only way to solve this problem is to adopt a schema-less method of handling data. Once you take away the issue of having to pre-transform data before reconciling it, you can apply an agile and holistic approach that works across regimes and can future-proof the organisation against subsequent regulatory change.

You can also use one data integrity system across the entire reporting lifecycle, rather than relying on a variety of point-to-point solutions. This gives you much greater transparency and oversight of the reporting process, not to mention a clear audit trail.

We also believe that by empowering end users to build controls themselves, you can significantly increase business agility. By cutting out time-consuming processes such as documenting requirements and handing over the build to a separate team, end users can accelerate the deployment of the controls and checks required for robust regulatory reporting.

By adopting a fundamental shift in approach, powered by intelligent technology, regulatory teams can significantly reduce the burden of data integrity checks, and subsequently protect the institution against fines and loss of reputation.

For more information on how you can apply this approach to your organisation – and how Duco can help – download our whitepaper on Ensuring Data Integrity For Regulatory Reporting.