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Accenture Regulatory Reporting As A Service

In this new Accenture Finance & Risk document we review how our Regulatory Reporting as a Service offering allows clients to transform their regulatory reporting capability through process improvement, cost reduction, standardization and enhanced transparency. See our other presentation on Financial Reporting Robotics:

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Accenture Regulatory Reporting As A Service

  3. 3. SUMMARY As the number of new regulations wane, clients are looking at new ways to significantly reduce the cost of complying with Regulatory Reporting Requirements. Accenture offers a Regulatory Reporting as a Service offering that can allow clients to transform their regulatory reporting capability through process improvement, cost reduction, transparency, and standardization across the industry. Copyright © 2017 Accenture. All rights reserved. 3 With the new and ever complex external reporting landscape, financial institutions are faced with a variety of challenges such as: Consequently, institutions should consider strategic solutions that can help them effectively manage these associated costs by: • High cost of regulatory reporting • Lack of standardized approach across industry • Complex and manual intensive processes • Large number of employees involved • Lack of transparency into regulatory reporting process • High technology costs due to multiple tools and support costs • Significant costs to address regulatory changes • Possible reductions in the cost of regulatory reporting that can range in the 40-60% (based on our experience) • Standardizing regulatory reporting solutions across the industry from a data standards and rule interpretation perspective • Optimizing and redesigning processes • Automation and robotics to improve the capabilities of the existing team • Dashboard reporting that provides insight into data quality and the Regulatory Reporting process • Reducing cost associated with regulatory changes
  4. 4. Note: Please see Legend slide for definition of acronyms HIGH PERFORMANCE FINANCIAL REPORTING FRAMEWORK Consolidating frameworks, processes, and technology create efficiencies across reporting functions. External / Internal Reporting • Same data can be used to populate reports across the regulatory landscape and for internal purposes - reducing redundant activities MIS / Shareholders • With more accurate reporting results, financial results can be produced faster Functions • Cross function transparency can be created allowing for the dynamic integration of new systems BrokerDealer AssetManagement Insurance CapitalMarkets Bank Reporting Regulatory (External) OCC FDIC NCUA FRB SEC CFTC CFPB FHFA FINRA NAIC ESFS Basel Functions Risk Treasury Finance Human Resources Control Line of Business External Data (Market) Legal Workflow and Requirements • Straight through processing of information across all systems to help meet reporting needs Organization • Overarching controls and governance to help manage risk, with well communicated roles and responsibilities Technology • Seamless user experience to investigate, manage risk, and create new information and data BENEFITS OF CONSOLIDATION Internal Management Information System (MIS) and Shareholders Informational Senior Management Operations Board Actuals Forecasting Support Organization Technology Workflow ModelingPolicy Training RCSA Procedures Resource Location Audit Business Rules Performance Metrics Calculators Aggregation Web Services Reporting Engine Technical Rules Batch Management Process Workflows and Requirements Sourcing and Validation Reconciliation Adjustments Transformation Distribution Data Management Investigation and Analysis Security / Audit / Controls Copyright © 2017 Accenture. All rights reserved. 4
  5. 5. ACCENTURE REGULATORY REPORTING OFFERINGS Accenture has developed a set of nine key regulatory offerings to tackle current challenges in the regulatory reporting space. Copyright © 2017 Accenture. All rights reserved. 5 DESCRIPTIONVALUEPROPOSITION Regulatory Reporting Dashboard User Defined Tool Assessment Approach Capability Design & Data Sourcing Integrated Reporting Toolset Implementation Data Quality Management Target Operating Model and Governance Regulatory Reporting Vendor Implementation Financial Reporting Robotics Regulatory Reporting as a Service Standard dashboard components measuring the effectiveness of data processing and measurement of data improvement over time. Develop an approach for the assessment of manual tools for determining a tactical and strategic elimination strategy. Develop and design reporting processes and capabilities. Document key steps for data processing, populating reports and collecting key reporting data attributes. Framework outlining the standard process, capabilities, and technology components required to streamline reporting and centralize finance data for straight through processing. Develop standard data quality management operating model (framework) for the identification, investigation, and resolution of data quality issues. Create target operating model and governance structure for regulatory reporting capability to allow for clear roles and responsibilities, ownership, process documentation, and governance. Support the client’s implementation of regulatory reporting tools through vendor selection, business and functional requirement gathering, tool configuration, and testing / go live support. Identification of manual processes in the key reporting capabilities. Assessment and implementation of Robots into the regulatory reporting operating model. Centralize and outsource the reporting process / responsibilities, improving data quality and sourcing efforts for greater accuracy and transparency into the information used for reporting. • Increase automation • Improve report accuracy • Improve data quality • Reduce time to change • Reduce manual data • Increase automation • Improve report accuracy • Improve staff usage • Reduce manual data • Improve governance • Increase data oversight • Reduce risk • Improve time to report • Increase automation • Improve report accuracy • Improve staff usage • Reduce manual data • Improve data quality • Improve report accuracy • Reduce regulatory actions • Increase ownership • Improve governance • Reduce redundant processes and controls • Increase automation and functionality • Improve report accuracy • Reduce manual controls • Increase automation and functionality • Increase productivity and speed to report • Increase security and controls • Reduce reporting costs • Increase productivity and speed to report • Improve data transparency
  6. 6. EVOLUTION OF REGULATORY REPORTING Regulatory reporting evolved significantly in breadth, depth, complexity and supporting tools. Data TypeReport Types SubmissionReport Preparation Organization & Governance Process & Controls 2000 2010 2017 20252009 Finance data Call reports, TIC reports, etc. Paper submission Very manual process using end user tools Regulatory reporting performed by finance Manual processes & controls Dedicated regulatory reporting capability Regulatory reporting as a shared service Capital, market & credit risk reports Comprehensive capital adequacy stress testing & 9Q projections Capital, market & credit risk data Line of business, legal, operational risk, human resources, external market data Dedicated databases with manual aggregation Regulatory reporting as a utility Primarily automated aggregation & preparation Mostly automated report preparation Primitive electronic submission Comprehensive electronic submission Limited automated processes & controls Extensive controls integrated into reporting tools Extensive automated processes & controls Early Years Expansion of Capital & Risk CCAR Stress Testing & Projections Expansion of CCAR Regulatory Reporting as a Utility Regulatory Reporting as a Service LEGEND 6Copyright © 2017 Accenture. All rights reserved.Note: Please see Legend slide for definition of acronyms
  7. 7. REGULATORY REPORTING AS A SERVICE (RRAAS) – WHAT IS IT? Centralizing a reporting process & responsibilities, utilizing a standard data model, and sharing the cost of technologies results in a service that lowers risks and improves a firm’s bottom line. Increase in Efficiency Standardized Reporting Process Similar Technologies Same Data Model Same Regulations and Reports • OCC • FDIC • SEC • Sourcing & validation • Cleansing (reconciliation & adjustments) • Transforming • Data management • Change management • Data investigation • Loans • Deposits • Cash Benefits of a Shared Service Reduce Technology Costs Improvement in Data Quality Reduce Filing Fees & Regulatory Action Theme Examples of RRaaS Processes & Capabilities • Report population • Investigation & analytics • Security, audit & controls • Data cleansing • Calculations/derivations/ aggregations • Report population • Derivatives • Securities • BASEL • Etc. 7Copyright © 2017 Accenture. All rights reserved.Note: Please see Legend slide for definition of acronyms
  8. 8. Process Capabilities Business Integration Corporate Core Enterprise Integration Change Management Governance Vendor Management Data Management Technology Architecture Resource Management Operating Model Execution Requirements & Workflows Maintenance Data Quality Management & Testing Knowledge Management, Training & Development Functions Technology Systems Centralized Repository Reconciliation Tool Adjustment Tool User Tools Mgmt Operational Dashboard Transforma- tion Engine Aggregation, Dataset Designer Variance Commentary User Interface Approval Mgmt Security Mgmt Reporting & Analytics Tool Robotic Automation RegTech, Digitalization Services Report Production Insights Metho- dologies BCBS, Risk Data Aggregation Principles Compliance Metrics & Assessment Report Monitoring Revisions & Re- statements Banking Capital Markets Asset Management Insurance Broker Dealer Non- Financial Products & Services Sourcing Transformations Validations Reconciliation Adjustments Data Mgmt Investigation / Analysis Security / Audit / Controls Risk Liquidity Finance Forecasting Audit & Compliance Management Reporting Non-Financial Strategy Senior Mgmt. Portfolio Mgmt Risk Mgmt Customer Mgmt Tech Mgmt Audit HR Legal, Compliance Security Accounting, Controller REGULATORY REPORTING TARGET STATE OPERATING MODEL The Target State Operating Model of the Regulatory Reporting as a Service includes a complete set of components within business and enterprise integration, services, process capabilities, report production and technology. 8Copyright © 2017 Accenture. All rights reserved.Note: Please see Legend slide for definition of acronyms
  9. 9. FINANCIAL REPORTING PROCESS CAPABILITY MODEL Level 1 Level 2 Level 3 Level 3 – Sub Category Manual activities impact key areas of the reporting process slowing efficiency, increasing risk, and making it difficult to audit reporting. CORE WORKFLOWS AND REQUIREMENTS SUPPORTING WORKFLOW AND REQUIREMENTS Security / Audit / Control Investigation and Analytics Sourcing and Validation AdjustmentsData Management TransformationsReconciliation Report Preparation CannedEntitlementsData Sourcing Controls TransactionMetadata Management Formulas Drill Down Data Masking Capital ManagementTechnical Aggregated Capital Thresholds and Materiality Quality Assurance Report Changes and Maintenance Internal Quality ControlExternal Ad HocBusiness Derivation Rules Regulatory Thresholds SOX PerformanceData Accuracy Aggregation Rules Escalation Criteria Operations MarketRule Confirmation Escalation Tracking Retention and Archiving Operational DashboardManual UploadLineage and Traceability Error Resolution RiskModel Approval RCSAControls Model Definition and Enhancement Break Thresholds Versioning DerivationsResolution Restatement Data Quality Pro Forma ControlsAdjustment ApprovalData Approval Cross Report Metrics Model Governance Security ReportsSourcing Adjustment InventoryData Governance Calculations Mapping to General Ledger Data Mapping Validation Rules Research Variance Commentary AuditDatasets Report Submission AnalyticsException Tracking Aggregation Attestation Policy and ProceduresCapital Results Narrative 9Copyright © 2017 Accenture. All rights reserved.Note: Please see Legend slide for definition of acronyms
  10. 10. RRAAS CAPABILITY ACTIVITIES Based on our experience, a typical banks' regulatory reporting process consists of 500-1000 process steps, and where automation and consolidation can help reduce the number of processes by 80%. A B C D E F G H+ I J+ K + Data ModelCapabilities Activities • Calculates and derives outputs based on data model • Provides adjustment support to sourced information • Produces reports for approval • Aggregates results • Provides transparency • Measures controls Security, Controls & Audit Sourcing & Validation Reconciliation Data Management Report Preparation Adjustments Transformation Investigation and Analytics Aggregation Calculation Derivation ReferenceTransactional Sourcing & Validation Expect about an 80% reduction in process management responsibilities Security, Controls & Audit RRaaS RRaaS • Provides transactional and reference requirements based on model • Provides reconciled data Bank 10Copyright © 2017 Accenture. All rights reserved.Legend: Report Data
  11. 11. RRAAS LOCATION STRATEGIES Our experience indicates that leveraging non-local resources can help reduce human capital costs by about 50%, but the appropriate location strategy is dependent on time zone differences, language and cultural barriers and other factors. 1. Accenture offers multiple centers to perform RRaaS. Client and Accenture are encouraged to agree on criteria for selecting the outsourcing strategy and the corresponding geography. 2. Business case and identified savings may vary depending upon the center used. A plan and roadmap from the selected center(s) is needed to understand geography risks and procedures. 3. Currency and interest rates can significantly impact project revenues. 4. Depending on the geography, escalating commercial discount might be applicable. 5. Recommended geographies: Philippines, India, Spain (specifically for Spanish clients), Mexico and Maldives Islands. Onshore Nearshore Offshore Benefits Example: Wilmington, Kansas City Example: Toronto Example: Bangalore, Manila Challenges • Same time zone • Optimal communication • Highly skilled regulatory reporting team • High rate for deployed resource • Same or similar time zones • Some cost savings • Appropriate level of communication • High rate for deployed resource • Some travel costs • Currency volatility • Lowest rates for deployed resources and high savings • Overnight support • Communication difficulties • High travel costs and production delays • Currency volatility • Opposite time zones • Language and cultural barriers Geography Considerations 11Copyright © 2017 Accenture. All rights reserved.
  12. 12. RRAAS IMPLEMENTATION CHALLENGES While RRaaS is designed to improve the reporting capabilities of all banks, yet a bank’s size can create implementation challenges. 0 1 2 3 4 5 Organization & Governance Report Types & Requirements Data Complexity Report Preparation Report Submission Processes & Controls Technology / Tools G-SIB US BHC IHC • Data quality & types of data • Number of source systems Data Complexity • Establish organization & governance structure • Resource & location strategy Organization & Governance Report Submission • Report sign off and submission process • Report submission tools Technology & Tools • Presence of end user tools • Use of regulatory reporting tools Challenge Complexity Based On Size Complexity Factors • Number of reports • Report complexity Report Types & Requirements • Report preparation process • Aggregation & adjustments Report Preparation • Manual processes & controls • Automated processes & controls Process & Controls 12 Copyright © 2017 Accenture. All rights reserved. Note: Please see Legend slide for definition of acronyms
  13. 13. BENEFITS & VALUE DELIVERED Copyright © 2017 Accenture. All rights reserved. 13 Implementation Timeline Efficiency Gains Target Cost Reductions Ownership Existing Offerings Performed Separately RRaaS ValueDrivers “Plug & Play” Synergies 40-60%* in Potential Savings 80% Processes Transitioned* Client owns the Operating Model (technology, process, people, governance) Multiple individual executions of each current offerings by integrating them into client’s pipeline Performance limited to client’s infrastructure and operations with recognized inefficiencies Tactical approach to reducing costs by focusing on individual elements Client’s Operating Model is transitioned to Accenture (technology, process, people, governance) One-time implementation to offer all capabilities by mapping source data to RRaaS data model Highest level of automation and synergies across all interconnected capabilities by outsourcing processes and integrating existing offerings Strategic approach by targeting cost reduction on the outsourced processes instead of a particular area or system of the Regulatory Reporting process RRaaS Benefits RRaaS is an industry leading solution that can provide significant benefits to clients by leveraging existing capabilities and applying them in a more aggressive manner to help achieve the greatest benefit possible. * Based upon Accenture experience.
  14. 14. ACCENTURE CONTACTS Brian Stefka Accenture Finance & Risk Regulatory Reporting Practice Lead Dallas, Texas Albert Janer Accenture Finance & Risk New York Samantha Regan Managing Director Accenture Finance & Risk Global Regulatory and Compliance Lead New York For more information, contact us or visit for our latest thinking. Charles Babcock Accenture Finance & Risk Regulatory Reporting Practice Lead New York Mark Lee Accenture Finance & Risk New York View our additional presentations on Regulatory Reporting: • Financial Reporting Robotics • User Defined Tools • Regulatory Reporting Dashboard • Regulatory & Financial Reporting Offering
  15. 15. LEGEND Copyright © 2017 Accenture. All rights reserved. 15 BCBS: Basel Committee on Banking Supervision CCAR: Comprehensive Capital Analysis and Review CFPB: Consumer Financial Protection Bureau CFTC: U.S. Commodity Futures Trading Commission ESFS: European System of Financial Supervision FDIC: Federal Deposit Insurance Corporation FHFA: Federal Housing Finance Agency FINRA: Financial Industry Regulatory Authority FRB: Federal Reserve Board G-SIB: Global Systemically Important Banks IHC: Intermediate Holding Company NAIC: National Association of Insurance Commissioners NCUA: National Credit Union Administration OCC: Office of the Comptroller of the Currency RCSA: Risk Control Self Assessment SEC: U.S. Securities and Exchange Commission SOX: Sarbanes-Oxley Act TIC: Treasury International Capital US BHC: US Bank Holding Company
  16. 16. . Accenture, its logo, and High Performance Delivered are trademarks of Accenture. ABOUT ACCENTURE Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network —Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 425,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at DISCLAIMER This presentation is intended for general informational purposes only and does not take into account the reader’s specific circumstances, and may not reflect the most current developments. Accenture disclaims, to the fullest extent permitted by applicable law, any and all liability for the accuracy and completeness of the information in this presentation and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit, or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professionals. Copyright © 2017 Accenture All rights reserved. 16