What is Integrated Reporting Framework (IReF)?

Since the financial crisis in 2008, financial institutions are facing ever-increasing regulation and reporting requirements. This steep rise of reporting obligations has proven a significant challenge for the banks, as well as for supervisory authorities. Ensuring data quality, coping with redundancies and a lack of harmonization are only a few of the ensuing problems. In addition, cross-border banks have to report to multiple national authorities according to varying requirements in the countries in which they operate, increasing the demand for resources and cost of the compliance. 

Integrated reporting framework (IReF) is an initiative of the European Central bank (ECB) to standardise, harmonise and integrate existing European System of Central Banks (ESCB) statistical frameworks across countries and reporting domains, with the main objective to reduce the reporting burden on euro area banks in line with Article 338(2) of the Treaty and Article 3(a) of Council Regulation (EC) No 2533/98,  while meeting the information needs of the ESCB. 

The main principles of this initiative are: 

  • Reduce - reporting burden on banking institutions by replacing national reporting templates and redundancies. The national central banks (NCBs) as well as the national competent authorities (NCAs) will only receive one integrated set of reported data rather than many separate reports, which should also lead to drastic efficiency improvement and cost savings. 
  • Increase - data quality, integrity and ability to strengthen the banking and monetary union. 
  • Elevate - the agility, speed and depth, with which policymakers can react to new developments since they will be able to have access to data fit for new purposes. 

The gains in cost efficiency would be achieved by economies of scale and systematic application of the “define once, report once, regulate once, perform as one system” principle.

Proposed scope for IReF 

In the initial phase, the IReF is focusing primarily on ECB statistical datasets relating to banks and will hence cover the requirements of the ECB regulations on BSI and MIR statistics, SHS-S and AnaCredit. In respect of SHS-S, it will also cover requirements for banks in their role as custodians. Other ECB statistics that do not directly relate to banks’ balance sheet assets and liabilities, such as ECB payments or money market statistics, are not currently covered. 

The intention is also to integrate reporting obligations on banks’ own positions and transactions arising in the context of statistics on balance of payments (b.o.p.), international investment positions (i.i.p.), financial accounts and securities issued. Consideration is being given to integrating other requirements arising from the collection frameworks of international organisations, such as BIS locational banking statistics and IMF standardised report forms. The feasibility of better aligning the IReF with the Financial Reporting (FINREP) requirements applicable at the solo level is also being assessed. 

Key phases of IReF program 

  • 2021 - 2023 Cost-Benefit Assessment (CBA) analysis and Complementary CBA 
  • 2023 - 2024 Design and public consultation of the new regulation 
  • 2025 - 2026 Adoption of the new regulation 
  • 1.1.2027 - Start of the reporting 

What are the implications for the members of the European banking system?

ECB, EBA, European System of Central Banks (ESCB) and the banks in the Eurozone countries are actively participating in all phases of the IReF program through a series of assessments, Q&A sessions, reports and feedback analysis, during the consultative phase. This extensive consultative phase is to ensure a deep detailed approach to all aspects of this large change to banking regulatory reporting requirements in the European Union. 

The adoption and implementation phase of this new reporting requirement will trigger changes to existing processes and solutions, that will require focused effort from both individual banks and regulators on both national and EU levels to successfully implement IReF. 

How can you prepare for these upcoming challenges?

"Granular data reporting and data visualization will become highly important. There will be a clear shift in the required skillset for reporting teams – an affinity with data will become as important as an affinity with regulation." (Regulatory Reporting: New Challenges and Technology Themes/Chartis Research)

Financial institutions will need to adapt their reporting infrastructures to address complex data and reporting challenges. Regnology’s regulatory reporting solutions offer standardization from granular data to reports including data dictionaries, models and processing logic. It enables to automate and simplify data transformation, report generation, and distribution allowing FIs to respond faster to new requirements such as IReF.