Elevating compliance: conquering the IReF and granular data reporting challenge

As an industry leader in regulatory reporting solutions, Regnology strives to prepare our global client base for imminent regulatory developments across jurisdictions and around the world.

In this Q&A, Regnology's Product Director Adriana Ellice-Flint unpacks the European Central Bank’s (ECB) recently published report: “Complementary cost-benefit assessment of the Integrated Reporting Framework (IReF)”.

Give us a high-level summary of the report and tell us where it fits into the wider story of IReF implementation.  

The Integrated Reporting Framework (IReF) is an initiative started by the ECB to standardize, harmonize and integrate existing European System of Central Banks (ESCB) statistical frameworks across countries and reporting domains, with the goal of reducing reporting burdens on financial institutions while still securing the required information. By replacing national templates with a single integrated set of reported data, the ECB hopes to bring about efficiencies and cost savings while improving data quality, integrity and supervision. 

This recent report summarizes the discussions that have been had to date and takes a careful look at the potential impact of IReF – its merits, potential pitfalls and how those affected will need to respond. By surveying the banking industry and other relevant stakeholders, the report assesses the state of play across domains and countries to design ideal scenarios for the collection aspects of this new framework.  

Tell us your major takeaways from the report. What stood out?

This report dives into the potential value of extending IReF to cover Country Specific Requirements (CSRs) – reporting requirements that do not arise from ECB statistical regulations but are instead covered by national legislation. Doing so would reduce redundant local reporting extensions and standardize reporting across jurisdictions.  

The report reveals that the banking industry considers CSRs to be a significant cost driver in data reporting. Many existing CSRs are covered by IReF due to its high level of detail and granularity, but there is work to be done in determining how to best minimize duplicative reporting efforts. On the whole, however, industry participants do not object to reporting larger amounts of data as such. 

Additional two reports were published on “Additional analytical value and operational aspects” and “Closer alignment with FINREP solo” which provided even more insights into some of the proposed reporting datapoints that the industry feels will be more costly than beneficial: more granular real estate information, origination and termination of loans by type, and information on standardized non-negotiable instruments. The potential focus on loans would require additional detail not currently reported, which could take up additional resources. Lastly, the proposed changes will need to consider how to report granular information on natural persons while remaining compliant with GDPR. 

The report reveals that the banking industry considers CSRs to be a significant cost driver in data reporting.

Adriana Ellice-Flint Product Director

Which parties will benefit most from the proposed requirements in the report, and which will face challenges? What comes next? 

From an analytical point of view, larger cross-border banks operating in multiple jurisdictions will benefit most from IReF, as their national reporting obligations will decrease. Smaller entities may face a bigger challenge, as the ECB is seeking new data points not used for their current reporting to satisfy the CSRs. Overall, participants affirm that adopting a unified approach to granular data reporting proves beneficial for both reporting banks and supervisory functions, ultimately contributing to the stability of financial systems. 

These are the final reports for the Cost-benefits Assessments before the official IReF proposal. These results will help the IReF team at ECB, along with National Central Banks of Eurosystem, weigh the pros and cons of the scenarios under consideration for all topics and make decisions that minimize the burden on financial institutions while securing the necessary information. We expect to see the proposed framework later this year, with a projected go-live in 2027. 

Participants affirm that adopting a unified approach to granular data reporting proves beneficial for both reporting banks and supervisory functions, ultimately contributing to the stability of financial systems.

Adriana Ellice-Flint Product Director

How can Regnology help financial institutions evolve their approach to reporting and achieve IReF compliance? 

We see IReF as another part of a larger shift from template-based workflows to granular data reporting. Regnology is more than prepared for this shift thanks to our non-redundant, granular-sourced data model. This model has been in development for over 25 years and has served as the basis for our innovative IReF-specific solution, which will help banks overcome the key challenges of implementation: ensuring data availability and quality, standing up granular data workflows and increasing speed and volume of data processing. With a unique combination of battle-tested RegTech and SupTech solutions, domain expertise across our team and a unique perspective from working with both regulators and the regulated, Regnology is built for a future of regulatory reporting that is defined by granular data. One key feature of our platform is powerful data visualization – data dictionaries, models and processing logic all enable automation and simplification for data transformation, report generation and distribution, enabling financial institutions to respond faster to new requirements.  

In addition, our platform caters to some of the key areas financial institutions will be focusing on as they prepare for IReF. Our cloud-based architecture enables nearly endless scale and ease of interfacing, so users can work with granular data directly on their screens. Our robust suite of data management tools facilitate easy processing and effective validation checks and correction mechanisms throughout the reporting lifecycle, helping to manage larger volumes. Finally, when it comes to submitting and resubmitting granular data to regulators, our exceptions monitor offers comprehensive data quality management tools and Regnology’s Rconnect enables seamless submission and feedback processing between the regulated and regulators.

What advice can you offer to financial institutions preparing for IReF and the overall shift to granular data? 

We recommend that financial institutions embrace the benefits of the Bank Integrated Reporting Dictionary (BIRD), a collaborative project between central banks and industry members that provides a free standardized data model for regulatory reporting to prepare data for impending requirements.  BIRD helps define the steps required to prepare source data for regulatory output via enrichments, derivations or calculations, and can help firms map their data to the required reports. IReF logical model is developed in parallel, following the same principles and will be fully integrated into the BIRD, as indicated by ECB. 

Our team is currently working on a standard connector for BIRD, using AI to enable clients with disparate data models to connect to Regnology easily. In the meantime, firms can interface with our solution directly. 

With IReF implementation just around the corner, now is the ideal time for financial institutions to begin adapting their granular data reporting capabilities. Start a conversation with us today to ensure your firm is adequately prepared. 

You might also be interested in

  • IReF and cross-border reporting challenges


    IReF and cross-border reporting challenges

    Explore the cross-border reporting challenges faced by large FSIs and how these firms can benefit from moving regulatory reporting into a unified IReF reporting framework.

    Read more
  • IReF implementation: Exploring challenges and solutions


    IReF implementation: Exploring challenges and solutions

    Explore key challenges and solutions in implementing IReF.

    Read more
  • Getting ready for IReF


    Getting ready for IReF

    IReF represents a dramatic, end-to-end shift in regulatory reporting. What are the areas banks need to focus on to ensure timely readiness for the start of IReF reporting?

    Read more

Contact us