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EY 2023 Regulatory Reporting Target Operating Model Survey Report

Banking industry volatility propels regulatory reporting to center stage.

    • Banking industry volatility earlier in 2023 drew increased regulatory attention and assessment and put regulatory reporting functions in the spotlight. 
    • The industry should anticipate increased supervision of regional banks as well as those showing a growth trajectory.
    • Banks will need to examine, consider the impact of and optimize their future regulatory infrastructure, governance, operations, people and data/technology.

    We are pleased to present Ernst & Young LLP’s fifth regulatory reporting industry survey, the only survey of its kind in the market for 10 years running. We continue to see great interest in our survey and findings on regulatory reporting insights and trends. Survey respondents included a wide variety of US bank holding companies (BHCs) and foreign banking organizations (FBOs). The 2023 survey will help firms compare their regulatory reporting function and processes against those of other organizations and industry trends. The results of this year’s survey shed light on courses of action to consider in developing an agile, robust reporting function that proactively meets upcoming and long-term regulatory challenges.

    Recent volatility in the banking industry has prompted increased regulatory scrutiny and assessment and placed a spotlight on governance — as evidenced by the release by the Federal Reserve Board (FRB) on April 28, 2023 of its postmortem review of the bank failures. As such, the banking industry should expect high levels of supervision and enforcement activity in upcoming years. In addition, the industry is seeing a significant increase in integration activity, which is providing opportunities for applicable firms to review their regulatory reporting interpretations, technology, issues and change management processes, and supporting infrastructure.

    Download the complete EY 2023 Regulatory Reporting Target Operating Model Survey Report

    Firms should consider taking this time to review the following and make any changes to their regulatory reporting function to optimize it for success: 

    • Governance — Assess capabilities and understand the effectiveness of existing protocols, demonstrate remediation program effectiveness and review change management processes.
      • Firms need to ensure that their governance structure is robust enough to accommodate expected increases in reporting requirements and complexity.
    • Thirty out of 44 institutions have a Regulatory Reporting Governance Committee (RRGC).
    • Seventeen out of the 30 firms that have an RRGC report that it is chaired by either the head of regulatory reporting or the controller/deputy controller.
    • The remaining 14 indicated that they do not have an RRGC, with 64% of those institutions having assets under US$200b.

    • People and processes — Evaluate resourcing and talent needs to address meeting the potential increased regulatory burden. Establish comprehensive documentation of processes and interpretations, and develop recruitment plans to meet ongoing and ad hoc regulatory requirements.
      • Institutions are facing pressure to modernize the regulatory reporting function to reduce reliance on manual processes, improve overall data quality and resulting reporting accuracy, and increase automation of the report production process.
    • Large BHCs appear to be transitioning from product-based models to hybrid/other models (52%) or are staying consistent in their use of report-based models (43%). In addition, overall polling suggests that the report-based structure remains the most common method of team organization for report production (41%), consistent with 2021 survey results (47%).

    • Performance management — Establish robust quality assurance (QA) and quality control (QC) programs so that data being reported to regulators is complete and accurate.
      • Issues management processes are key to self-identifying issues and tracking them toward remediation. Self-disclosure is more advisable than having regulators find issues that need remediation within a mandated timeline.
    • Ninety-seven percent of respondents indicated that they have a formal issues management process with regular review of high-risk items by a governance committee.
    • Technology — Analyze whether automated processes are equipped to handle ad hoc requests from regulators, and if so, reduce reliance on manual processes by increasing automation; assess the ability to accurately produce new regulatory reports/ad hoc requests through data quality/strategic data sourcing.
      • In the 2021 survey, 46% of institutions reported having a highly automated regulatory reporting production process. In this iteration of the survey, we looked to gain greater insight into the automation levels of individual report types.
    • Ninety-four percent of firms noted reports with high volumes of data/high submission frequency (e.g., liquidity reports) as either highly or partially automated; 70% of firms noted core financial regulatory reports (e.g., FR Y-9C, Call Reports) as highly or partially automated.

    Sarah Sy, Adithya Simha, Sam Salmirs, Joe Castelli contributed to the article.


    Against the backdrop of recent banking volatility and the Federal Reserve Board’s (FRB) response to increase future banking supervision and enforcement, the EY 2023 Regulatory Reporting Target Operating Model Survey Report presents a snapshot of the banking industry’s regulatory reporting function. Covering all aspects of the regulatory function, from governance to technology and future trends, the survey findings are reflective of the responses from US bank holding companies (BHCs) and foreign banking organizations (FBOs) that participated.

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