What is Granular Data Reporting?
Granular Data Reporting introduces significant updates to the financial regulatory framework, focusing on granular credit and counterparty information, data quality, consistency, and reconciliation. These changes aim to enhance transparency and compliance across the financial services sector, ensuring more accurate credit risk assessments and reporting. The focus on granular data helps financial institutions operate more efficiently in a complex regulatory environment by improving the quality of risk reporting and aligning institutions with the demands of modern data-driven governance. Requirements globally include AnaCredit, IReF, the Hong Kong Monetary Authority’s (HKMA) Granular Data Repository (GDR), Belgium's BECRIS 2.0, the Australian Prudential Regulation Authority’s (APRA) Comprehensive Data Collection roadmap (CDC), the Monetary Authority of Singapore (MAS)’s Data Collection Gateway (DCG) and the Bank of Thailand’s (BOT) Regulatory Data Transformation (RDT).
Key objectives of Granular Data Reporting
⇢ Enhancing data transparency
Institutions are required to report detailed data on credit exposures and counterparties. This objective ensures that regulators have a clearer view of the credit landscape and risk profiles across institutions.
⇢ Strengthening data accuracy
It significantly raises the bar for the accuracy of credit reporting. Institutions must implement systems that ensure precise and timely submission of data, with some countries even requiring daily updates.
⇢ Improving risk assessment capabilities
The regulation facilitates a more comprehensive assessment of credit risk by mandating the collection of detailed and granular data, allowing firms and regulators to better understand and manage exposure risks.
These changes to financial risk frameworks emphasize more granular reporting, enhanced data validation processes, and the integration of real-time monitoring tools, requiring institutions to adopt more dynamic and data-driven methodologies to meet stringent requirements.
Who is affected by Granular Data Reporting?
Granular Data Reporting impacts financial institutions and banks globally. Granular Data Reporting touches multiple departments within a bank. Key stakeholders, such as regulatory reporting functions, compliance officers, risk managers, finance, IT, and data governance teams, need to ensure they have the systems and processes in place to meet these requirements.
Key challenges of Granular Data Reporting
⇢ Data granularity and management
Ensuring that all credit data is captured at a granular level, attribute by attribute, poses a significant challenge to institutions, requiring advanced data management solutions.
⇢ System upgrades and reporting infrastructure
The increased volume and complexity of data reporting demand significant investment in systems capable of managing, reconciling, and submitting large datasets across multiple jurisdictions.
⇢ Compliance costs and resources
Implementing and maintaining compliance for granular data reporting can lead to increased costs, as institutions must upgrade systems and allocate resources to handle the higher data and reporting demands.