What is the value of outsourcing regulatory reporting?

When it comes to key areas of the business, the regulatory reporting side may be one of if not the most key for long term operational sustainability.

Regulatory reporting is often a long but highly significant process, consisting of the submission of data to national competent authorities or authorised trade repositories in order to comply with the enacted regulatory provisions. In simpler words, it is the process companies go through to demonstrate compliance with the rules established.

In a recent post, RegTech firm MAP FinTech discussed how the outsourcing of regulatory reporting can offer benefits and efficiency gains in the long-term, and what the cost/benefit analysis of the decision can be.

According to the company, when a business is considering whether they should self-report or opt for a third-party solution, it is key they consider key areas around technology.

This includes things such as start-up costs, hardware and software, hosting, development team and support, connection fees and the extraction and consolidation of various formats of data from multiple sources with the interpretation of regulatory complex requirements and fields.

Additionally, in the area of regulatory compliance, businesses need to consider issues such as the impact of multi-jurisdictions, staying up-to-date with amending reporting requirements, monitoring and reconciliation and technical standards requiring deep-dive analysis and comprehension.

In the area of reporting, MAP FinTech detailed, “The higher costs associated with direct reporting to a Trade Repository as opposed to the cost savings available through the synergies and where applicable (aggregation) offered via a trusted third-party provider.”

There are also benefits in the area of human capital. This includes the avoidance of the high cost of employing experienced professionals and required continued training.

MAP FinTech said, “Most importantly, by utilising an established third-party vendor, one that has specific regulatory reporting expertise, the required capital investment in infrastructure, and supplementary dedicated support, financial institutions may benefit from the inherited synergies and economies of scale offered by such a large specialist provider as opposed to going solo and self-reporting.”

The company added that ‘with the ever-changing regulatory landscape, it is important to be mindful of the inherent risks and ever-present pitfalls that can plague non-discerning participants’. In this sense, utilising a professional service provider can help companies navigate through this process.

MAP FinTech concluded, “The real cost of compliance is the price of admission. As discussed above, an in-house solution should not be taken lightly. Whereas, when considering the options available, outsourcing offers a lot more for less.”

Read the full post here.

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