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ECB’s IReF and BIRD Promise Easier Regulatory Data Management & Reporting for European Banks

The European Central Bank (ECB), finding that its rules and systems for collecting and managing regulatory compliance data lacked key capabilities for analyzing data and processing it for collaboration, is working on a project with Integrated Reporting Framework (IReF) and a Bank Integrated Reporting Dictionary (BIRD) to address these issues for the banking institutions under its oversight. Long term, by 2027, this should ease the challenges of regulatory data management for banks.

In August 2018, the ECB reported that its statistics group had made adjustments for the European System of Central Banks (ESCB) and European Systemic Risk Board (ESRB) to be able to use data for their work. However, ECB’s Forecasting Analysis and Modeling Environment (FAME) and Data Intelligence Service Center (DISC) data platform, still had data inefficiencies and inconsistencies to be addressed.

IReF cost-benefit analysis on regulatory data management

To that end, the ECB then first introduced plans for an Integrated Reporting Framework (IReF) and a Bank Integrated Reporting Dictionary (BIRD) that complements the framework. In April 2021, the ECB surveyed banks to include a cost-benefit analysis in the IReF, assessing the impact on regulatory data management. As of August 2021, ECB’s timetable to complete and implement IReF and BIRD includes adoption of a final definition and plan for these rules by the end of 2023, to be followed by work from 2024 to 2027 to put the rules in place, building all necessary systems. In addition, a draft of IReF is expected by the middle of 2022.

The ECB promises that IReF and BIRD will reduce the burden of reporting workloads for banks and standardize regulatory data, leading to long-term savings on data operations around regulatory data management. IReF will be mandatory and BIRD is voluntary, with BIRD being developed in collaboration with European banks. While IReF and BIRD promise certain long-term savings, banks will have to cover some costs up front to implement necessary systems and to continue turning in reports in the prior formats as the ECB transitions to its new framework. Solution vendors such as GoldenSource will also be looking at mapping and aligning current regulatory data management infrastructure with the new approaches.

BIRD: for converting source data to generate regulatory reports

Under IReF, banks will be able to submit required reporting to ECB, the Bank for International Settlements (BIS), the European Banking Authority (EBA) and the Resolution Mechanism all at once, under one framework. BIRD will make it possible to convert source data from banks’ proprietary and vendor systems into standard formats from which regulatory reports can be automatically generated. The integrated dictionary, according to the ECB, creates some advantages including:

  • Redundancy-free input. Concepts are identified and described just once.
  • Clearer transformation rules. These will provide one single interpretation of regulations that can serve as a standard.
  • Less burdensome reporting requirements. Not as much time and effort will be needed to understand the requirements.
  • Clearer understanding of data and how it is produced, making it possible to manage and use that data more effectively.

BIRD will cover numerous frameworks for statistical, prudential and resolution reporting. For IReF, BIRD covers several ECB statistical reporting requirements:

  • Granular credit and credit risk data (AnaCredit)
  • Securities Holding Statistics
  • Monetary Financial Institutions Balance Sheet Items
  • Monetary Financial Institutions Interest Rate Statistics
  • Statistical information to compile the balance of payments and national accounts

In a June 2021 presentation, risk and data experts from Deloitte Netherlands said BIRD will support changes to the regulatory reporting process and enable reporting production. Specifically, BIRD will enable artificial intelligence and analytics in a manner not previously possible, producing insights on critical data elements and data hotspots, while putting data quality issues in context.

Europe-wide standards IReF and BIRD for regulatory data management

With IReF and BIRD, the ECB is putting forward a bold plan to improve its own Europe-wide standards for regulatory data management while making it easier for the banking industry to comply at the same time. Whether these ambitions will be achieved remains to be seen, but the next 12 to 18 months require banks to invest what they need to work with IReF and BIRD at the same time that they continue to give the ECB input on how these frameworks will function.

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