Transformation of the Banking Industry with Automated Data Flow

Does Automated Data Integration and Reporting help Banks Explore a Data-first Approach?

Over the years, the Indian banking industry has been transforming constantly. Various new technological upgrades have been demanded by the Reserve Bank of India (RBI). The focus has always been financial inclusion and better management for liabilities. Notably, banks are now better at strategy for corporate vision and goals.

One such demand, Automated data flow (ADF) ensures that banks conduct businesses fairly, transparently, and responsibly. The data integration and reporting method accelerates submissions of error-proof, consistently updated data from banking systems using straight-through reporting process (STP) to company decision makers as well as regulators.

It’s clear ADF is a helpful addition for accurate real-time data. This step is a strategic move for a technology-driven data collection approach to achieve 100% automation for data flow. And in the process, it helps avoid manual intervention in data processes for a variety of uses.

Which Banking Reports Are to Be Automated Today?

To comply Banks have to submit a set of 222+ regulatory reports at varied frequency to the RBI. These reports fall under 12 categories:

  • Financial statements analysis

  • Basic statistical returns

  • Department of Banking Supervision (DBS) returns analysis

  • Statutory returns analysis

  • Risk management

  • Delinquency and collections

  • Treasury

  • Reconciliation

  • Foreign exchange and international operations

  • Fraud

  • Advances

  • Deposits

Regulatory Climate in India | The Past and the Future

Currently, the reporting process within the existing scenario is complex and most banks need time to smoothen the process. This is mainly because the task of modernizing legacy banking systems comes with the added responsibility to create a comprehensive data-first environment for more purposes like internal reporting, credit monitoring, and market research.

Formerly, banks submitted regulatory reports manually. It raised issues with audits as the end product had inefficient and uncleansed data. As per the ADF project, RBI asked banks to create a central data repository (CDR) that works as a data lake harboring data from every banking system.

The same data also suffices for internal insights making it important for banks to look into every possibility to utilize centralized data. The first stage requires timely solution deployment, seamless integration of a CDR, and maintenance of data cleansing processes.

For the second stage, banks need robust internal corporate governance specifically for regulatory reporting. Internal audit processes should be tightened, avoiding third-party vendors to handle maintenance of ADF once the automation exercise is completed. An internal ADF maintenance team should be in the picture that handles the dynamic nature of reporting requirements.

In recognizing technology upgradation as a process that helps regulators too, RBI is being expected to issue clear and exhaustive guidelines for all regulatory reports. They are required to establish defined channels and processes with member banks to deal with queries on reporting. The regulator is also being expected to be more flexible in terms of timeframe for automation of regulatory filings.