Regulatory requirements are often template-based and ask for aggregate data, meaning that data sets are fixed to a use case and hence the data received cannot be easily reused for other purposes. New reporting requirements are needed each time additional or ad hoc information is needed.
Data is inconsistently described
Reporting data is often sourced from legacy data systems within reporting firms that are not always integrated. This often results in heterogeneity of data for any given product or transaction – both within a bank and across different banks – as systems will describe these data differently.
Infrequent backward looking
Regulatory reports are submitted to supervisors from reporting entities on an infrequent basis (e.g every month or quarter). At times of heightened risk, the need for up-to-date data increases but given the static nature of regulatory reports, supervisors may not have the timeliest data to make informed judgments.
Different sources of data are not integrated
Information contained in regulatory reports are often linked with other types of information that may point to emerging risks, but these sources of information are not connected. For instance, information sourced from market data and news are often the first indications of emerging risks but it is difficult for supervisors to scan through the vast volumes of market and news data to assess which point to a need to take early action.