Next-Generation Regulatory Reporting (NGRR) - Are banks in Asia embracing Next Gen Regulatory Reporting?

As the complexity of regulatory compliance continues to mount, Asian banks are turning to Next-Generation Regulatory Reporting (NGRR) solutions in order to maximize their compliance efforts.

By leveraging data automation, advanced analytics and sophisticated AI solutions, banks are becoming more agile and adept at meeting the demands of regulators and staying compliant​​ able to quickly and accurately as identify systemic risk more quickly and efficiently while streamlining their reporting process across the board.

The benefits of NGRR are manifold: improved accuracy, faster turnaround times on regulatory filings, real-time insights into compliance performance, and greater transparency throughout the reporting process. Top financial institutions such as DBS Bank, HSBC, and Bank of Thailand have already implemented NGRR, and the trend is set to continue in the Asia-Pacific.

However, many remain hesitant about adoption due to concerns regarding the costs of implementation and adoption. As these regulations become more stringent, with potential risks for noncompliance growing each day, it’s crucial for financial institutions across the region to consider the benefits of NGRR when making business decisions.

5 Key Trends Fueling Next Gen Regulatory Reporting

1. Automation via RPA & CI

End-to-end regulatory reporting is becoming increasingly automated using Robotic Process Automation (RPA) and Continuous Intelligence (CI). This type of automation utilizes AI and machine learning to streamline the regulatory reporting process, improving accuracy and reducing manual errors.

The benefits of automation via RPA & CI are many - financial institutions can optimize their data extraction while ensuring all reporting is done in compliance with local regulations.

One bank adopting RPA mechanisms is KB Kookmin Bank, which implements a range of automated processes using RPA systems from UiPath to lower costs and improve customer experience in the post-COVID era. The bank expects to reduce costs and improve productivity by automating its end-to-end process.

2. Data Aggregation & Standardization

DBS - Southeast Asia’s most prominent banking firm - is utilizing AI to enhance its own internal data aggregation systems to ensure standardization of data across the organization. By leveraging AI, DBS is able to automatically clean and categorize large datasets in almost real-time, improving accuracy and streamlining reporting processes.

While RegTech is nothing new, what’s unique about DBS’s RegTech solution is it’s use of AI and NLP to analyze and extract data from unstructured regulatory documents. Rather than relying on processes, AI-driven solutions the firm to identify key regulations, extract relevant data and create a centralized repository of information.

Data aggregation and standardization are becoming increasingly important for financial institutions as regulators focus on data consistency across jurisdictions. The issue that often arises is how firms should manage the large volumes of data generated and ensure that it’s in a format suitable for reporting purposes. With AI-powered RegTech solutions, data can be quickly and accurately gathered from multiple sources, which allows firms to streamline their reporting processes.

3. Systems & Processes Head To The Cloud

Asian banking and financial firms are increasingly drawing cloud computing, AI and machine learning, Big Data analytics, and blockchain-based platforms into their overall systems operations - a move that’s helping to reduce operational costs, improve customer experience and enable better compliance management.

For instance, Standard Chartered Bank recently announced a partnership with Microsoft to shift its core banking and trading systems to the cloud. They aim to move all digital ventures, including virtual banking and banking-as-a-service, to cloud-based solutions by 2025.

Cloud-based solutions allow organizations to rapidly deploy applications, scale resources, and manage costs more efficiently. As a result, banks can create regulatory-compliant platforms that offer more meaningful customer engagement and personalized services such a tailored banking products.

4. Growing Demand for Fintech Solutions

In order to integrate advanced solutions, more and more banks are leaning on the skills and expertise of fintech startups. By partnering with larger institutions, fintech digital startups in Southeast Asia will reportedly rake in over $38 billion in revenue by 2025.

Solutions such as Momo, Shopee, and Grab are forcing financial institutions to reckon with the rise of one-stop “banking super apps” that offer cross-border transactions (and even greater regulatory compliance.) Banks can deploy the power of third-part fintech solutions rather than develop internal ones, allowing them to focus on other areas while still providing customers with the benefits of a truly digital banking experience.

And it’s not just smaller banks or companies jumping on the fintech bandwagon. Bank of Thailand has begun setting frameworks for distributed ledger technology (DLT) to enable real-time payments. The bank also explores using AI and ML for risk management, customer service automation, and other areas to maintain regulatory compliance and improve customer service.

5. Exploration of Digital Currency

Regulators are currently exploring the potential of central bank digital currencies alongside the development of the overall digital payment ecosystem.

Implementation is being undertaken at varying paces, from the swift roll-out of digital currency in Cambodia and national pilots in the People's Republic of China to ongoing research and proofs of concept in other parts of the world, including Singapore and Hong Kong, China.

Adopting digital currencies will likely gather momentum as the world moves towards a digital future. Banks must remain ahead of the curve, focusing on understanding the implications of digital currency on their business model and operations. This requires creating frameworks to collect, analyze, and act upon fast-moving data sets - abilities that only advanced AI systems can manage.

Banks such as HSCB recently implemented their machine learning-based solution, Project Iceberg, which automates the collection and analysis of regulatory data. This type of solution can enable banks to quickly gain insights into the regulatory landscape and make informed decisions, allowing them to remain compliant while also taking advantage of new opportunities.

Is Your Financial Institution Ready To Pivot to Next Gen Expectations?

As consumers across Asia look to financial institutions to provide innovative, digital-first solutions and services, those that don’t keep up will be at a competitive disadvantage. However, shifting toward the adoption of NGRR will require firms to invest in the right technology, skills and processes to ensure that all areas of their business—from risk management to customer experience—are compliant with the changing regulatory landscape.

To ensure that regulatory expectations are met - and maintained - banks must begin to lay the groundwork for a variety of use cases, from customer onboarding to transaction monitoring and more. With the right technology, institutions can build a bridge between their current operations and the expectations of tomorrow’s customers, organizations and regulators. That way, banks can continue to provide reliable services with security, compliance and trust that customers expect.

To support this transformation, banks must also invest in the right technology solutions to ensure they have full visibility into their operations and customer journeys. With data-driven insights, firms can proactively identify potential issues before they become costly mistakes.

The Future of Banking is Here. Learn More At The FinTech Connect Leaders Summit

Join us from August 28-30, 2023, in Singapore and learn more about the latest trends in banking technology, including Next Generation Regulatory Reporting (NGRR). Featuring sessions with financial services leaders and tech innovators, this is the must-attend event for anyone interested in driving digital transformation in the banking industry.

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