What started with Basel in banking sector, continued with Solvency II in insurance industry clearly indicates major changes in a way how financial sector would be controlled as a whole. For some time now, a transition of financial regulation into a sphere of dynamic market scrutiny soundness to risk, is underway. Changes that are underway put challenge in front of central European central bodies, as well in front of National competent authorities (NCA's), and gives them responsibility to set processes, mechanisms, tools and technology that would serve in name of efficient, faster, more precise and in timely manner financial control. At the same time giving them possibility to be able to efficiently adjust state of information collected to real market state.
As much as, with respect to regulatory requirements, undertakers are seeking the optimal solution, on the other hand it is important, for central banks and supervisory agencies, to put in place an integral and specific system that will give answers to all challenges set by pan-European bodies. A solution that would help in alarming and preventing the next economic stress while moving into a dynamic market scrutiny – soundness to risks. We comply to all the challenges put in front of NCAs with our IFSS – the Integral Financial Supervisory System.
Our IFSS system offers a holistic and integral approach to financial sector regulation. The system includes automated collection, processing (validation) with responding, creation and adjustment of templates with versioning and publishing. The system has included the end point for visualisation (qualitative and quantitative analysis). Besides mechanisms for automated collection and processing over reported instances, we offer the central management of master data - registers (entity, outer users, certificates, templates rights...) as well as HUB preconfigured data connections for data transfer to pan-European bodies (Level II reporting to EBA and EIOPA). System has included advanced analytics with risk calculation automated control mechanisms according to capital adequacy calculation specification from central regulation bodies.
The IFSS comprises of the following main elements:
- Front end system for automatic submission of reporting templates with submission history tracking, and the possibility of checking validation before submission
- Front end system for manual template population and submission with validation according to effective template version.
- Register management (master data) compliant with ECB RIAD requirements.
- Outer user management, with submission rights and permissions according to a supervised sector and relevant reporting templates, certificates, signatures related to reporting templates integrated with central registers.
- Internal user management with rights and permissions.
- Module for the creation of new reporting templates, correction (versioning), automatic publishing of valid templates as actual for submission, with the integrated XSD designer and sub module for defining additional report validations with the proprietary pseudo-code technology.
- Queueing system for automated processing and responding to collected reporting instances with monitoring.
- Management module for tracking reporting processes and processing steps.
- End point system for visualisation (qualitative and quantitative analysis) of processed instances with analytics for direct and indirect supervision (system for internal validation with controllable workflow)
- HUB module for the exchange of files with EBA and EIOPA, with pairing responses integrated with the management module (Level II reporting, pan-European remittance).
- Dimensional data model (DW) according to DPM (Taxonomy data point model) Basel and Solvency, cell store oriented with proprietary algorithms for fast processing and versioning with no need for classical ETL.
- Automated risk calculation controls.
- Automated BI and analytical set of reports over Basel and Solvency data models.
Validation (XBRL, XSD, additional…)
Our solution for financial regulation supervision has integrated proprietary high performance XBRL M3N® and XML technology, suitable for larger central banks which is require batch processing of large instances on optimal way. Our technology was only one of a few that pass validation from side of EIOPA in used in level II reporting, and works fully as expected.
Defining process of additional validation
The definition of additional validation is enabled through proprietary pseudo code interpreter for formula definition with auto complete functionality. At definition of additional validation over XSD scheme, the user is offered with possible operators, root nodes, and inside of a root node appropriate child node of templates (semantic domains and subdomains), formulas for evaluation are easy to define with our proprietary pseudo code language - excel like. Definition of additional validations is defined on user friendly computer screen with autocomplete where user defines left and right side of formula and operator between them with according tolerance of end value. Parametrized result of validation assess is as well easy to define along with guides and explanations (e.g. (e.g. left side [BalanceSheet_24][P2445]; right side [BalanceSheet_24][P2451]+[BalanceSheet_24][P2457]; operator [=]; tolerance [0,99]; output ['Formula [BalanceSheet_24][P2445]=[ BalanceSheet _24][P2451]+[ BalanceSheet _24][P2457] did not satisfied with tolerance of 0.99] Our proprietary cutting edge pseudo code technology rapidly reduces the time required to integrally define the form of additional validation reducing errors in definition process, and most important improving quality of collected information.
Dimensional analytics according to taxonomy DPM
The analytical system besides the template management system is very important determinant of IFSS system. Our dimensional data model, built with proprietary algorithms specifically for Basel and Solvency taxonomies, is anything but standard DW. It is a dimensional model similar to cell store and adjusted to architecture of XBRL, which is suitable for analytical capabilities. In case of taxonomy change this model does not require intensive IT technical involvement at remapping the new positions in the forms and binding to the old versions for interrupted data flow at analytics and easy change management. Our technology eliminates the need for traditional ETL and can be installed on open source databases. On top of that, we are working on advanced algorithms that will, over time, compensate for complex classification of financial instruments and their changes over time, and the fact that each data cell is determined by domains, dimensions, formulas and associated metrics, which reflects in the size of the storage and speed processing. Already today, our algorithms and automatic maintenance of mapping exceed competitive systems in performance up to 100 times, while our processing XBRL technology is among the most advanced on the market.
On top of our DW Basel and Solvency model we have built in BI set of analytical reports that are enhancing automated building of statistical supervisory reports, and set of risk calculation controls that are signaling flaws in reported periods according to specific undertaker reported information, making internal validation process ease.
- Level II reporting (EIOPA, EBA)
- Local templates definition
- Loading of locally extended taxonomy (e.g. French SURFI)
- EBA-ITS: CoRep (Own Funds)
- EBA-ITS: FinRep
- EBA-ITS: Large Exposures
- EBA-ITS: Leverage Ratio
- EBA-ITS: Liquidity Ratios
- EBA-ITS: Asset Encumbrance
- EIOPA: Solvency II (Pillar 3)
- Other jurisdiction outside the EU, single loading of taxonomy or integrating current templates, and easy template creation or management later on
Some of features supported:
- Tool for internal validation (visualisation with business rights workflow and statuses)
- Strong BI analytical set of reports on top of DW Basel and Solvency model
- Automated risk calculation controls on reporting and undertaker periods
- Tracking of risk indicators defined by EU central reporting bodies (EBA, ECB, EIOPA)
- Analytics and risk dashboard with indicators defined by pan-EU bodies
- Abstracted business data layer in analytics (HD - highly dimensional according to DPM – Taxonomy Data point model) for easy versioning of analytical reports due to data model changes and integrated calculation engine and optimization algorithms due to complex classification breakdown of financial instruments
- Rights and security
- Multilanguage (preconfigured English)
- Validation (XBRL, xml, additional...)
- Standardized interface for data collection (according to XBRL central DPM and XML) manual entrance or upload of finished instances – interface for manual entrance is separately licensed due to overhead in scenario implementation
- Automated processing and responding to undertakers
- Sign off
- Audit trail
- Pdf and excel export with RC codes
- Reporting templates design, versioning and publishing
- Additional validation definition within defined reporting template with proprietary pseudo code technology – Excel like
- Register data model design RIAD ECB compliant
- Data HUB preconfigured for EIOPA, EBA with acknowledgment pairing with supported SFTP, MQ, HTTPS protocols
- Automated level II reporting
This unique and innovative solution offers an integral but at the same time flexible implementation model. The model can find its application despite of the complexity and the level of integration of the current solution for statistical supervision in the current IT infrastructure. This is done thanks to a modular design according to stress points that are following business LoBs. The IFSS could easily comply with any potential migration strategy of transition into the new - the IFSS solution. Our deep industry knowledge has enabled us to create the off-the-shelf system that offers efficient end-to-end functionalities from templates creation, automated publishing and processing of submissions, to analytics and level II reporting, all integrated within one system. The solution that is ready for the new financial regulatory framework and challenges set ahead.