Governance, risk & compliance
Regtech: Banking’s painkiller
Regulatory reporting can be seen as a burden as it brings no competitive advantage but carries heavy penalties if performed inaccurately. Jim Banks talks to David Lian, global head of fi nancial regulatory reporting at Standard Chartered, and Jules Speight, HSBC’s chief architect of corporate functions and group fi nance IT, about the challenges the process brings and how regtech might force it to evolve.
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ince 2008, the banking industry has had to deal with a growing burden of compliance duties, as new regulations came thick and fast to ensure global financial stability. More and more data is being funnelled to regulators in an increasingly complex set of formats and templates. Money, time and effort are all being spent on an activity that offers no immediate advantage to a bank’s bottom line. What banks do get is the freedom to continue operating. Compliance is essentially a licence to do business. Failures in compliance damage an organisation’s reputation and its relationship with regulators – as well as the financial cost of hefty fines. As recently as December 2021, the UK’s Prudential Regulation Authority (PRA) imposed a fine of £5.38m on Metro Bank for failing to act with due diligence in
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relation to the regulatory reporting of its capital position, as well as for failings in its regulatory reporting governance, controls and investment. “In recent years, global regulators have shown they are prepared to deliver significant penalties and public censure,” observes David Lian, global head of financial regulatory reporting at Standard Chartered. “It is important for any institution to react quickly to changing requirements, updating manual processes, customisations and adjustments. Otherwise, that firm is running operational risk that could result in financial penalties.” Last year, Standard Chartered was itself the target of a £46m fine. This was for failing to be open and cooperative with the PRA and for failings in its regulatory reporting governance and controls in
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