Financial reporting is one of the most important aspects of decision-making in banking and financial services across the globe, yet many firms still rely on manual processes to compile these reports which are prone to errors, inefficiencies, and compliance risks. As regulatory requirements tighten and data complexity increases, automation is emerging as a game changer in this field. But what exactly does reporting automation mean, and why should financial institutions be excited about it?

Regulatory Reporting Requirements

There are many regulatory bodies around the world such as Canada’s OFSI, the US’ Federal Reserve and France’s ACPR however, today we will focus on the UK’s Prudential Regulation Authority (PRA) which is part of the Bank of England. Regulatory bodies such as the PRA impose strict reporting requirements on financial institutions, which are essential for compliance and risk management. These reports include but are not limited to:

Basel III Liquidity and Capital Reporting

• Liquidity Coverage Ratio (LCR) – Measuring a bank’s ability to meet short-term obligations.
• Net Stable Funding Ratio (NSFR) – Ensuring banks have stable funding over the medium to long term.
• Net Cumulative Cash Flow (NCCF) – Tracking cash flow mismatches.

Capital & Financial Performance Reports:

• Leverage Ratios
• Capital Forecasts
• Balance Sheet Forecasts

Statement of Profit or Loss (PRA107)

Stress testing and risk management

• Stress Testing Data – Evaluates how banks will perform under serious adverse conditions

Other reports are often required such as institutions in the UK handling over £25 billion, which are subject to additional ring-fencing requirement.

The challenges of current reporting methods:

Traditional, manual reporting comes with several challenges:

1. Data Inconsistencies: Manual data entry and disparate systems lead to errors and reconciliation issues.
2. Time-Consuming Processes: Financial reporting teams spend hours aggregating data and preparing reports, delaying insights.
3. High Risk of Human Errors: Even small miscalculations can have significant regulatory and financial consequences.
4. Compliance Challenges: Adapting to changing regulations requires frequent updates, which manual processes struggle to accommodate.
5. Cost of compliance: The cost of reporting has increased by more than 50% over the last 8 years.

In an era where data complexity and regulatory demands are increasing, financial institutions must embrace automation in order to stay ahead. By reducing errors, improving efficiency and ensuring compliance, reporting automation is no longer a luxury but a necessity.

BankingBook Analytics (BBA)’s automation addresses these challenges by enhancing efficiency, accuracy, and compliance:

1. Increased Accuracy: Automated processes eliminate human errors and ensure consistency.
2. Faster Reporting Cycles: Reports that previously took days or weeks can now be generated in minutes.
3. Improved Regulatory Compliance: Automated tracking ensures that financial regulations such as Basel III and IFRS are adhered to accurately.
4. Cost Reduction: Reducing manual work frees up resources for strategic tasks rather than repetitive data entry.

When it comes to streamlining reporting and reducing compliance costs, partnering with experts in this field like BBA can make all the difference. With advanced ML algorithms and years of experience as a trusted partner, BBA can help financial institutions improve accuracy, speed and compliance. Is your institution grappling with one of the above-noted challenges? It's time to take a fresh look at how you can improve productivity and redefine decision making using automation.