EBA has recently finalised the study of the cost of compliance of European Economic Area (EEA) banks with the supervisory reporting requirements. As a result, the EBA has identified numerous recommendations that could lead to a potential reduction of the bank’s reporting costs by up to 15-24%. The EBA will implement most of the recommendations as part of its ongoing policy to develop and enhance the common EU supervisory reporting framework.
The cost of compliance study focuses on three main aspects. Firstly, EBA has researched the actual (supervisory) reporting costs incurred by the EEA banks, especially those related to the EBA’s technical standards (ITS) on Supervisory Reporting. Secondly, it assesses how the reduction of some specific reporting requirements affects reporting costs and supervisory effectiveness. Lastly, EBA assesses whether the reporting costs were proportionate with regard to the benefits delivered. Additionally, in the report, EBA has categorised EEA banks into various proportionality categories introduced in the Capital Requirements Regulation (CRR).
The main output of this report is 25 recommendations provided by EBA with the goal to reduce the costs of compliance with supervisory reporting requirements. These findings primarily address small and non-complex institutions yet will still improve reporting requirements and processes for all institutions. EBA’s recommendations focus on four broad areas: changes to the development and design for the EBA reporting framework and requirements, coordination & integration of data requests and requirements, and changes to the reporting process, focusing on the broader use of technology.
The cut in costs will be achieved by reducing reporting scope for small and non-complex institutions: additional liquidity monitoring metrics, asset encumbrance, and other parts already from DPM 3.2 will be implemented.
The study also identified the necessity to remove the barrier to the wider adoption by institutions of FinTech and RegTech solutions and promote better digitalisation of the institutions’ internal documents and contracts.
b.fine also believes that regulatory reporting should be digital, more cost-efficient and user-friendly and thus has developed a platform – b.rx, that is future proof and can reduce reporting costs even further.