COREP and FINREP – Information Technology and Infrastructure Challenges
Under the CRD IV reporting framework, firms may find themselves facing a plethora various Information Technology (IT) and infrastructure challenges. Many firms may likely be operating without a single data warehouse or repository, and so may need to track the required data from multiple sources on multiple occasions. The increased volume and granularity of data required for reporting purposes may oblige firms to develop intermediary databases, repositories, file systems, or information retrieval systems, in order to effectively source the relevant data from within the firm.
In light of other reporting frameworks currently in place within the EU (e.g., the updated Markets in Financial Instruments Directive (MiFID II) and the European Market Infrastructure Regulation (EMIR)) firms may also likely be forced to develop reporting data warehouses in order to track and integrate data from multiple heterogeneous information sources. This will require firms to map the data to a common structure, to store in a centralised data warehouse, to implement cross-validation and adhere to EBA validation rules.
Firms must also ensure data integrity, which may prove to be highly challenging in practice owing to potential information conflicts (i.e., semantic inconsistencies, data inconsistencies), integrity violations (i.e., hardware and software errors, inadvertent user errors) and technology obsolescence.
Firms may be required to embed data integrity controls within the data collection process, along with tools and processes to enable swift correction of data. Indeed, CoREP and FinREP may also likely raise a number of recognised data mapping issues such as missing values, code changes, data type mismatches, and moving data from unstructured to structured fields.
Firms may find that mapping data into the new range of templates (e.g., from GAAP to IFRS) will be a time-consuming process that increases in complexity as the mapping of levels progresses (i.e., system-to-system, object-to-object, field-to-field, value-to-value).
It is recommended to use a technological solution such as the one offered by DataTracks to meet these challenges with expertise.