How Big Data Analytics Can Untangle the Web of Regulatory Compliance
Managing asset liability and assessing liquidity risk are a top priority for banks in today’s regulatory environment. Ever changing and expanding regulations from Dodd-Frank to CCAR have put banks under intense pressure to lower risk with increased compliance reporting.When it comes to big data and compliance, regulators refuse to be satisfied with monthly compliance reports and are now demanding a daily view of risk metrics. This requires banks to deeply examine the risks hidden in their deposits, derivatives, and loans and report on millions of records to create accurate cash flows for calculating liquidity risk.
Analyzing these overwhelming mountains of data has left banks questioning if it is even possible to meet these nightmarish regulatory standards. However, not complying is just not an option. Failure to comply has cost banks over $150 billion in fines over the last decade, the most recent example being the $1 billion penalty that federal regulators slapped on Wells Fargo. These fines have also resulted in a loss of public trust for banks, tarnishing their image severely.
Big Data and Compliance: The Need for Technology
While the case for big data and compliance management is self-evident, the volume, complexity, and constant change that typifies banking data makes regulatory analytics an agonizing task. Big data analytics for financial services regulatory compliance requires different categories of data – transaction data, operational data, reference data, investment data, and security data. Every category is handled by a separate team and differs vastly in terms of size, format, and change frequency. With each new regulation, banks have to sift through and report on certain supersets and subsets of this data. Regulatory compliance also emphasizes the concept of a “single version of truth”. To prove compliance, banks want to use a single central version of data analysis in their reports instead of pulling together multiple analysis versions of overlapping data from different teams.
This is where a big data analytics platform such as ShareInsights comes to the rescue. ShareInsights can handle and analyze huge torrents of data extremely efficiently and at low costs compared to traditional methods, making big data and compliance management more compatible (and streamlined) than ever. The platform can combine data from disparate sources and bring down analysis time from months to minutes, drastically reducing the turnaround time for compliance data analytics. Also, ShareInsights is capable of new types of analysis that were just not possible in the past because of the sheer complexity, diversity, and volume of data.
How ShareInsights Fulfills the Prerequisites to Successful Big Data Regulatory Compliance
Combine Siloed Data
The data needed for regulatory compliance typically resides in multiple different systems and formats – customer data, loan data, operational data, deposit data, trading systems data, data from legacy systems, and more. ShareInsights has 70+ built-in data connectors that let banks connect to and access these diverse data sources and formats to perform regulatory compliance analysis.
Easily Analyze, Track, and Collaborate Overly Complex Data
With the self-service features offered by ShareInsights, banks can easily build data pipelines from these diverse data sources using prebuilt tasks and drag-and-drop controls. Analyses can be built by one team and handed over to another team while maintaining a single source of the data. For instance, credit risk for a particular product can be analyzed by the team responsible for that product and the analysis can be passed on to and used by the team that calculates combined credit risk for all of the bank’s products.
Data lineage can be tracked and viewed in its entirety to perform root cause analysis – who changed what and when, how data transformed from one analysis to the next, and what was the source of every risk assessment. It is easy to understand how changes to data will impact other analytic assets in the pipeline.
Simplify Overwhelming Data Through Visualization
Once the relevant data is aggregated, banks can effortlessly visualize it using interactive charts and identify risk epicenters. Banks can thus create big data and compliance risk reports with clear data lineage to support their calculations. ShareInsights offers multiple widgets that compliance officers can use to visualize regulatory analytics (such as the results of stress tests) and share them with regulatory authorities.Regulatory pressure will continue to increase in the coming years, both in terms of complying with current regulations and meeting timelines and targets for new regulations that are introduced. Big data analytics is transforming regulatory compliance and the banking world will see increased use of platforms that can access, combine, govern and analyze not just banking data, but data from third parties, customers, and market activity. ShareInsights can help banks easily answer regulatory questions that often pop up such as “what was the source of this number?” and “how was the data changed and by whom?”. Uniting big data and compliance management through ShareInsights’ technology will result in powerful and flexible reporting that will enable banks to address compliance requirements straightaway and not after a prolonged process.