The Synthesis team developed txstreamFINSURV to give you, our clients, a truly strategic reporting solution. Many of you have been feeling way too much heat for far too long and it might be time for you to take a step back and revisit your approach to regulatory reporting.
You told us your requirements. We listened. Our goals were clear:
- Develop a product to take care of all South African regulatory reporting
- Make it strategic and scalable
- Ensure key resources are freed up for more valuable tasks and
- Focus on reducing risk and long terms costs
The resulting solution, txstreamFINSURV, achieves these goals in a unique and innovative way. Above all, it ensures that you take a strategic, rather than a short-term, approach to reporting.
Why the need?
The regulatory reporting burden has grown steadily over the last few years, both in South Africa and worldwide. There is increased scrutiny on taxpayer and financial institution activities. Regulatory institutions are using more sources to ensure they have as much information as possible and can highlight as well as investigate conflicting information from different sources.
The introduction of reporting has been gradual (rather than once off and quick). This allows institutions to adjust to the changes, and gradually grow their reporting solutions and processes. In turn, regulators can test and make incremental changes when required.
This approach, however, has led to bad habits and comes with some disadvantages.
The main disadvantage is that, gradual introduction leads to tactical as opposed to strategic solutions. When reporting demands are relatively low, they tend to be approached from a minimalist perspective: What is the least amount of work and/or investment needed to be compliant and resolve the current problem? There is also a limited view of what will happen in the future making it difficult to properly design and plan a strategic solution without making some (potentially dangerous) assumptions.
The current position
We are now a few years down the line and there is a clearer view of the landscape. We can accommodate changing requirements in a strategic solution from day one, as opposed to having to add them on as an afterthought.
The problem in many institutions, however, is that the original tactical solution has become entrenched and layers upon layers of patches have been applied to keep up-to-date over the years.
Each year, the reporting requirements change, in:
- Width (more entities need to be reported on, across more areas, with more report types),
- Depth (more information on each entity), and
- Frequency (yearly vs half-yearly vs monthly reporting).
Often the published changes appear to present only, a small increase on the previous report, meaning that an internal project is created to modify the solution used for the previous submission. However, since the new changes are built on top of a platform held together by hope and prayer, the simple change project presents more challenges than anticipated. Employees spend late nights at the office trying to meet the fast approaching deadline and frustration levels often boil over.
Other issues include:
- the limited number of resources that understand how the solution fits together (unless extra money and time is invested in bringing new people up to speed),
- typically, the resources involved in the project could be more efficiently used in other areas,
- team morale is damaged,
- there is potentially reputational risk associated with a tactical (as opposed to strategic) reporting solution, and
- the costs associated with the tactical approach are often much higher than calling a halt and implementing a strategic solution.
When looking at the current regulatory reporting environment in South Africa, I am sometimes reminded of the boiling frog metaphor. If a frog is dumped in very hot water, it will take the correct action and jump out immediately. However, if you put a frog in cool water, and gradually turn up the heat, it will eventually boil to death without jumping out.
This untenable situation was one of the key drivers that lead Synthesis to developing our txstreamFINSURV regulatory reporting product.
Please contact [email protected] for further information on both our txstreamFINSURV Rules Engine, Finsurv Reporting Application and Electronic BOP Forms.
By: James Eckhardt