From Compliance to Performance Using Technology to Drive Value from Regulatory Initiatives

In an economic environment of low inflation, low interest rates and single-digit returns on equity, banks are reassessing how technology can be used to derive value from regulatory initiatives.

There are two primary regulatory initiatives that are playing a key role in influencing bank business models:

• The need to establish higher standards of conduct. This is characterized by a focus on legal risk and conduct risk. It links operational losses with business costs and income, in order to improve the cost efficiency ratio.
• The recognition that the Basel Committee on Banking Supervision (BCBS) is committed to balancing risk sensitivity, simplicity and comparability. This is characterized by the interaction of the four key ratios, covering Capital Ratio (CR), Leverage Ratio (LR), Net Stable Funding Ratio (NSFR) and Liquidity Coverage Ratio (LCR). This creates the following needs under the Basel 3 capital adequacy regime:

  • A robust approach to stress-testing
  • A renewed focus on economic capital to complement calculation and optimization of regulatory capital
  • A holistic approach to balance sheet management
  • A reconciled and transparent reporting environment
  • An overarching enterprise risk technology and governance architecture.

Banks can no longer look at technological solutions as a series of separate silo-based projects to comply with regulatory initiatives. Instead banks need a holistic approach in which risk and finance data is seamlessly integrated and reconciled. The data must be capable of extraction and analysis to be used for different simultaneous purposes.

This paper will focus on prudential regulatory initiatives and recommend how banks might use technology to deliver value-added performance.

  • LinkedIn  
  • Save this article
  • Print this page  

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To download this content and continue reading...

You need to sign in to use this feature. If you don’t have a Chartis account, please register for an account.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: