EBA simplification is the first step toward integrated supervision

In our last article, we focused on EBA's simplification agenda and the data architecture imperative. Now let's talk about this concept of the "regulatory web." How do these two concepts connect?

Erik Becker: The regulatory web is the problem this new data architecture approach aims to address. For years, the real burden for banks hasn’t come from any single regulation, but from the web of overlapping requirements from different (supra-)national authorities – across prudential, financial, statistical, resolution and sustainability reporting, as well as national data collections, stress testing and disclosure.

When we talk about the regulatory web, we are referring to the costly fragmentation. Insights from the recent EBA Public Hearing in May confirmed that tackling this fragmentation is a central focus of the initiative.

“Simplification” has been a big topic in these discussions, but you have both suggested that simplification alone is not enough to reduce costs. Why is that?

Johannes Turner: Because simplification is not the same as deregulation. Authorities have consistently stressed that Europe would not pursue a path of deregulation that could lead to increased risks. At a broader level, the ECB’s High-Level Task Force on Simplification points in the same direction: simplifying the regulatory, supervisory, and reporting framework without weakening resilience.

Supervisors/Regulators are therefore not suddenly going to need less information; if anything, their information needs continue to grow as new risks emerge, new policy priorities are added, and new data domains come into scope.

That means if the underlying framework remains fragmented, reducing a few data points will not solve the deeper cost problem. The only sustainable answer is broader integration of reporting frameworks and data flows; otherwise, the burden simply reappears in another form.

Let’s break down that integration strategy. What does the first step look like in practice?

Erik Becker: The first step, which is the current phase, is all about eliminating silos within specific regulatory domains. This is at the core of EBA’s proposal: integrating separate requirements such as stress testing, supervisory benchmarking, and selected national data collections more closely into the regular supervisory reporting framework.

FINREP/IFRS 18 is slightly different. It is not primarily about silo elimination, but about adapting reporting to a new accounting structure while applying the same simplification logic.

The same general logic is visible elsewhere. The ECB is moving its Integrated Reporting Framework (IReF) into the realisation phase to consolidate all its statistical reporting,  while ESMA starts working to streamline transaction reporting. These are signs that regulators are first tidying up their own houses before broader cross-authority integration becomes possible.

What is the more ambitious Step 2? What are the preconditions for making this happen?

Johannes Turner: The second step is the future vision: eliminating silos between authorities. That is where things get really interesting. The future vision is not just a better-integrated prudential framework, but a world in which data can move more seamlessly between, say, a prudential supervisor like the EBA, a central bank such as the ECB, or a resolution authority like the SRB. The precondition for this is harmonizing how data is, and less of what is, reported. In case of identical requirements, data are shared already today, e.g., EBA ITS in the sequential approach EUCLID between ECB and EBA. Another very positive example shows the SRB, aligning its data sets with frameworks such as AnaCredit.

In case of non-identical but similar requirements, this needs a common technical framework built on concepts such as central data dictionaries, shared data spaces, and frameworks like common data models, e.g., EBA’s DPM 2.0. The groundwork is already being laid, with the European Commission requiring authorities to report on data-sharing plans. Definitely, more granularity will support any data sharing initiative, but we must not forget the importance of “semantic integration” of these different reporting requirements as a basic task, not to multiply efforts and costs.

Regnology has done a tremendous amount of work in these areas to build a central granular data model (RGD) for the integration of regulatory reporting. Also, other jurisdictions in the world follow those developments.

Johannes Turner: It’s important that banks do not read the EBA initiative in isolation. It is just one signal within a broader structural development. Across markets, regulators are moving toward more integration, more reuse, and more granular data. We are seeing a global wave, evident in initiatives such as the UK PRA’s Future Banking Data Project, Hong Kong’s GDR 3.0, Malaysia’s Project STREAM, and Canada’s DCM initiative.

Eric Becker: Exactly. This means institutions should take this as a prompt to look inward. They cannot solve global supervisory integration on their own, but they can address their own internal silos – between reporting, finance, risk, and adjacent processes – to prepare for where regulation is heading. That is where the real readiness question sits.