Modernizing Regulatory Reporting: Enhancing Data Operations through Automation

A leading international financial institution sought to enhance its regulatory reporting capabilities by implementing a new platform. The objectives were to increase automation, ensure seamless data flows, robust data governance, and regulatory compliance. Reports to be migrated include FR Y-9C, FFIEC 031, FFIEC 002, FR Y-9LP, and FR Y-15. The financial institution partnered with Arrayo to leverage its expertise in regulatory reporting, data management, and technology integration

Project Scope and Objectives

Arrayo’s responsibilities encompassed several key areas to support the transition to the new regulatory reporting platform:

1. Current-State Analysis
   • Development of a data dictionary and data flow diagram to document existing processes and data elements.
   • Analysis of the current data environment to identify gaps and areas for improvement.
2. Target Operating Model (TOM)
   • End-to-End Data Flow Process: Arrayo developed a comprehensive end-to-end data flow process that orchestrates the journey of data from diverse sources, such as the General Ledger (GL), Capital engine, and cloud data warehouse, to the regulatory reporting application. This process aligns with industry-standard TOMs and provides a standardized approach to data flows and controls, ensuring regulatory compliance throughout the data journey.
   • Data Attestation Process: The inclusion of a Data Attestation process further enhanced data governance and validation, providing a robust framework tailored to the client’s reporting automation needs. Comprehensive documentation of the end-to-end data process served as a valuable resource for stakeholders, ensuring transparency, facilitating knowledge transfer, and serving as a reference point for ongoing improvements.
3. Data Element Analysis and Mapping
   • Identification and analysis of required data elements for each report in collaboration with SMEs.
   • Mapping of data elements to specific report requirements.
4. Business Requirements Documentation (BRD)
   • Drafting of detailed BRDs that outline business rules, logic, and allocation methodologies for each report.
   • Enhancement of BRD templates based on the client’s recommendations to improve the overall BRD process.
5. Data Dictionary
   • Collaboration with the client’s Data Management team to identify Data Owners and ensure accurate data definitions and sources.
   • Creation of a comprehensive data dictionary documenting definitions, sources, and transformations of data elements.
6. Testing and Validation
   • Execution of a preliminary run of rules (proof of concept) to ensure they produce results consistent with production before transitioning to IT.
   • Support for Testing and Validation phases to ensure the accuracy and reliability of automated regulatory reporting processes.
7. Collaboration with IT
   • Transition from business requirements to system design, addressing technical challenges and ensuring IT team understanding of automation requirements.

Results and Benefits

• The establishment of a data attestation process and comprehensive data dictionary improved data governance and accuracy.
• The end-to-end data flow process ensured seamless integration of data from various sources, reducing manual intervention and errors.
• The implementation of robust controls and adherence to industry-standard TOMs ensured regulatory compliance throughout the data journey.
• The new TOM supported by the new platform significantly increased automation, reducing manual workload and enhancing efficiency.
• The framework established during this engagement provided a scalable solution that could be extended to future phases and additional report categories.

Conclusion

Arrayo’s partnership with this international bank on the implementation of a new regulatory reporting process based on a new technology platform resulted in significant improvements in data governance, process efficiency, and regulatory compliance. The successful execution of this project laid a strong foundation for future enhancements and the extension of services into the Testing and Validation phase, ensuring the continued reliability and accuracy of the bank’s regulatory reporting processes.