About the author: Perttu Haglund is in charge of Tieto’s Authority Reporting Services. He has long experience in different roles among Financial Service sector.
The financial crisis has driven political decision-makers into a situation that demands quick corrective measures. Finding common ground has proven to be difficult. Increased monitoring and regulations have been the easiest decisions to make.
As a result, firms in the financial sector are forced to make billion-euro investments in reporting systems and compile information that does not have a clear purpose of use. Have decision-makers fallen into panic?
Globalization and turbulence in the financial world have posed a serious threat to the development of the global economy and the growth of economic well-being. We are in a situation where financial institutions have not kept up with the pace of economic globalization and technological development.
Understanding issues seems to be impossible – or decision-makers lack the time to examine the issues in depth. The easiest solution has been to demand that financial sector firms provide more varied reports on their operations. Such demands have taken place in Europe and elsewhere. On a global scale some people are even talking about a regulatory tsunami. The authorities seek to form a better picture of the situation and required measures by collecting information. As a result, firms in the financial sector are forced to make billion-euro investments in reporting systems and compile information for which the authorities cannot provide a well-justified purpose of use.
Quantity is no substitute for quality
The perception that is inevitably formed is one of authorities hastily relying on increased reporting in their moment of distress. This provides decision-makers with an image of an active approach by the authorities. Firms in the financial sector compile data from all the basic systems in their businesses. Reporting applications developed by IT companies are often used to compile and process the data. Thousands of people participate in the work on European level. Thousands of reports are generated all over Europe.
In reality, a situation arises where reports are collected in such numbers that any sensible processing is likely impossible. Even though summaries are generated on a national level, it is questionable how the information can be utilized.
Understanding why one report is a prerequisite for high quality reporting
The work is basically seen as a “necessary evil” by companies in the financial sector. Reporting does not generate additional business or help yield better results. National regulatory bodies compile and refine data for different purposes before reporting to the European regulatory authorities. Regulatory authorities further compile and refine the data for the use of ECB and EU decision-makers. In order to make reporting feel positive, every individual participating in the work should understand why the work is done and how the data is utilized.
Cooperation and transparency generate cost savings
Reporting also seems to contain certain mysticism. It is as though the authorities are reluctant to reveal what they actually want to find out or what kind of conclusions will be drawn from the supplied data. In this case, adding transparency could be a better option than worrying about the intentional manipulation of the reported data. Has anyone given serious thought to where constructive and transparent cooperation could lead?
Overlapping reporting practices, complicated procedures and time delays, at the very least, should be removed. At the same time, reporting should be injected with more positivity for those doing the work, and the quality of data collection and processing should be improved. The strict practice of distributing information only to the parties who are obliged to file reports in many ways limits the opportunities to innovate in the field. This clearly limits cost-effectiveness.
Could it be time to examine current operational procedures with an open-minded approach?
Read more about reporting issues In Claes Lemnell’s blog “How do we make the “Cloud rain”..?”.
