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the chief data officer (CDO) -- this person is responsible
for driving business value from information assets
throughout the organisation, and thus plays a central role
in the deployment of any big data initiatives across all
four GFRC functions.
Helping regulators usher in a revolution
Rather than their current approach of obtaining information
from financial institutions via standardised forms and
submission files (for example, XBRL) -- which requires the
transformation of raw data into standardised forms based
on interpretations of the requirements -- regulators could
potentially use big data to directly monitor the financial
institutions' raw (untransformed) content, analyse patterns
and make predictions. This would ultimately allow better
safeguarding of the economy, from both the microprudential
and macroprudential supervision perspectives.
This also implies that financial institutions' regulatory
reporting function, as we know it today, could become
obsolete, with the focus potentially shifting towards
ensuring that all data is made available for regulators to
access, and, therefore, necessitating a complete overhaul
of internal policies and procedures.
Already, in fact, when a regulatory breach is suspected,
regulators have begun requesting access to (unstructured)
email trails and recorded telephone conversations. And it's
only a matter of time before regulators across the globe
adopt a more proactive approach in order to quickly detect
unusual behavioral patterns that point to, say, rogue trading,
market manipulation and insider trading.
Cloud computing and GFRC: made for each other
Moreover, an increasing number of financial institutions are
relying on cloud computing services to reduce the cost
of information technology via a pay-per-use model, while
enjoying 'rapid elasticity'; that's to say, the flexibility to scale
up or down, depending on the demand.
While cloud computing within the financial industry is
commonly used for software development environments
and customer relationship management (CRM) applications,
it is not yet a popular choice for GFRC. This is mainly due
to the security concerns and regulatory restrictions related
to data protection, since the data required for GFRC is
essentially of a sensitive nature (customer details, granular
financial information, et cetera).
With the advantages of cloud computing now being better
understood by the industry, however, and with regulators
slowly opening up to the model, studies carried out by
Wolters Kluwer Financial Services research suggest that
about 30 per cent of financial institutions now have the
ambition to leverage cloud-based technology for GFRC
within the next three years -- all to ensure greater value for
reduced effort and cost.
Even though big data and cloud computing are nothing short
of revolutionary in their own right, a big data/cloud combination
can yield even greater benefits. As big data brings along large
volumes, in a variety of formats and at different velocities,
cloud computing will allow it all to be supported by a cheaper,
more scalable and more simplified infrastructure.
Amid this shifting paradigm -- a reactive and siloed GFRC
approach being replaced by a strategic, forward-looking
one -- financial institutions that are quick to react will achieve
a trifecta of reduced cost, improved agility and enhanced
About the author:
With a decade of experience in various activities
related to software and services for the banking
industry in the Asia-Pacific, Wouter Delbaere is
accountable for the overall success of the regulatory
reporting business in the region.
A previous Deputy General Manager for Wolters Kluwer
and Regional Program Manager for one of the biggest
banks in the world, Delbaere is a certified big data,
cloud computing and project management professional
(PMP), with a master's degree in Information
Technology. Over the past eight years, he has earned
a strong track record for helping banks to comply with
regulatory requirements across the Asia-Pacific region.
A native of Belgium, Delbaere holds a bachelor's
degree in Business Computer Applications from
Silliman University in the Philippines, and a master's
degree in Information Technology from the Katholieke
Universiteit Leuven in Belgium.
Cloud computing for GERC functions within
the next three years?
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