Connecting the dots of the international debate on the standardization and granularity of regulatory data

The European banking reporting 'ecosystem' for statistical, prudential and resolution purposes has become increasingly complex and costly for both authorities and financial institutions. We are confronted with a significant number of surveys nowadays, combining aggregated, item-level and transactional data. The underlying business phenomena are often overlapping and not always defined in a consistent, integrated and reconcilable manner. Against this background, this paper tries to (i) connect the dots of the intense debate that has taken place in various European and international fora over the last five years, focusing on how to rationalize the overall reporting framework, and (ii) map out a possible way forward. Two main streams of innovative initiatives, high-level reports and studies are reviewed. The first aims to define a mandatory, common granular layer of multipurpose (integrated) data, located in banks' IT systems, which would provide programmable code to reference these data in order to generate the reporting of regulatory metrics. The second stream aims to standardize banks' operational systems by generating granular contractual information in near real-time. This paper argues that, despite the attempts to demonstrate the potential benefits of these innovative approaches, their adoption to replace the existing setup still appears premature even in the medium term. While exploring new ways to benefit from 'on demand' access to timely and integrated sources of data, the authorities in Europe have already launched strategic initiatives for the rationalization, standardization and integration of the existing reporting framework. In this respect, the ESCB's IReF and the wider integration initiative at European level, following the EBA's feasibility study, are important and tangible actions to significantly reduce the reporting burden on all stakeholders in the medium term. The cooperation between the European authorities and the banking industry will be key in achieving this general goal; this paper argues that the ESCB's BIRD would provide an important contribution.