Industries
Banking
Banking Services Transformation: Unlocking Exponential Value
Solution
Consulting
TCS Consulting Services to Achieve Success in the Digital Era
Highlights
- In today’s rapidly evolving financial landscape, financial institutions (FIs) face an ever-increasing array of complex regulatory requirements
- FIs use many regulatory reporting solutions to enrich the data and submit the returns by leveraging up-to-date regulatory reporting templates for various jurisdictions. However, the long-term relevance of RegTech solutions is increasingly being called into question
- Financial institutions must build their own roadmaps to modernize their legacy data collection and reporting processes.
Overview
The financial sector is ever evolving, and the regulatory frameworks are constantly adapting to the new risks, technologies, and market dynamics
Fundamental transformation in regulatory reporting processes-
The regulators are demanding granular, real-time data for risk monitoring and systemic analysis. This shift is evident in initiatives like Basel III and IV reforms. Additionally, the regulators across the globe, to ensure efficiency in this process, have started replacing the returns and form-based approach to a column or table-based approach. The regulators are also introducing frameworks that will allow them to extract financial and statistical data from financial institutions through application programming interfaces (APIs).
For financial institutions, staying compliant is not just a matter of meeting legal obligations but also ensuring long-term business viability and trust. However, the rapid pace of regulatory change, particularly with increasing demands for data transparency and new capital reforms, has created challenges that traditional compliance frameworks and even regulatory reporting technology solutions (RegTechs) struggle to address in the long run.
Let us delve into the challenges faced by RegTechs and potential actionable strategies for FIs to navigate new regulations effectively.
Challenges
Despite investing heavily in cutting edge RegTechs, many financial institutions face challenges in adapting to the dynamic regulations.
Legacy Systems: Traditional IT infrastructures often lack the agility to process, analyze, and report real-time data efficiently.
Data Silos: Fragmented data systems hinder institutions from generating holistic, accurate compliance reports.
Cost Pressures: Compliance costs are rising, with institutions needing to invest in technology, training, and personnel.
Regulatory Reporting solutions (RegTechs) to In-house solutions – The shift ahead
FIs use many regulatory reporting solutions that facilitate enriching the data and submit the returns by leveraging up-to-date regulatory reporting templates for various jurisdictions. However, the long-term relevance of RegTech solutions is increasingly being called into question due to the changing requirements of regulators:
- Direct Data Access by the Regulators: Regulators are requiring real-time access to financial institutions’ data. This shift diminishes the need for intermediary solutions that process and aggregate data as per specific reporting templates.
- Cost vs. value proposition: The value proposition RegTechs today is heavily inclined towards up-to-date regulatory reporting templates for various jurisdictions. As the regulators are expecting better data readiness and compliance to be integrated in business-as-usual, the institutions are questioning the cost-effectiveness of leveraging RegTechs.
- Dependency on expensive and scarce RegTech skilled resources: The implementation and maintenance of RegTechs requires very specific technical skills of the solution. With limited availability of such skills in the market, the institutions face challenges in scaling up their regulatory compliance initiatives.
Solution
Embracing change to achieve seamless compliance in the new regulatory era
The readiness of the FIs for data integration must be in place instead of periodic, batch-based reporting, allowing regulators to access up-to-date information directly from financial institutions’ systems. This necessitates investment in unified data architectures and APIs that support seamless, automated data sharing. Additionally, the industry must prioritise end-to-end digitization, replacing manual processes with advanced analytics, AI-driven automation, and machine-readable reporting tools.
With regulators demanding access to the granular data, FIs have their work cut out for them, as they try to navigate through hurdles like:
- Rigid legacy systems and architectures
- Lack of understanding new data requirements
- Non availability of complete and accurate data for reporting
CFOs and their team of financial institutions have a bigger role to play in ensuring that the new compliance requirements are met by:
- Understanding the existing end-to-end data supply chain including the dependencies and the risks involved
- Identifying and defining the data needs as per the roadmap designed by the regulators
- Interpreting the new reporting requirements
- Building efficient processes and robust controls to complete the returns
- Aiding in the design and implementation of the data controls to ensure quality data outputs
- Developing in-house solutions for significant efficiencies in the ‘to-be’ operating model
- Augmenting the organization’s efforts to build effective data analytics framework
- Embedding compliance capabilities into their core systems
- Including better, stronger and user-friendly business rule engines to manage the enrichment of data required for regulatory reporting
All the above will result in building a modern platform with inherent features like one common repository for all business rules, real-time data processing, integrated analytics etc.
Thus, the CFOs can help reduce dependency on the external RegTechs tools and will save millions of dollars of license fees every year.
TCS Advantage
We help financial institutions build roadmaps to ensure full compliance with the new regulatory requirements with optimized costs.
Backed by technology, regulators are making swift amendments to introduce efficiency into their data collection processes. We help financial institutions achieve smoother, more efficient adherence to evolving standards by developing advanced solutions, building robust data infrastructures, fostering a culture of compliance, and most importantly ensuring that the contextual knowledge is embedded in the end-to-end data value chain for regulatory compliances.
By leveraging automation, AI-driven insights, and scalable frameworks, financial institutions can proactively address compliance challenges before they become bottlenecks.
Our approach not only ensures regulatory alignment but also enhances operational resilience, enabling financial institutions to navigate the evolving landscape with confidence. With a future-ready compliance strategy, CFOs can help turn regulatory demands into opportunities for enhanced transparency, reliable and on-time data availability, not just for compliance but for strategic decision making.
