1.How big is the change in reporting requirements with respect to APRA EFS? Are these changes applicable to me?
There are two key themes in the revised APRA EFS requirements – increase in granularity of data sought and alignment of reporting requirements on size and complexity of the organisation.
APRA is seeking data at a more granular level such as contract and transaction level details, which calls for considerable investments in systems and processes on the part of ADIs.
While the overall number of forms required to be submitted have reduced; introduction of new industry, sectoral classifications and data quality framework coupled with the increased granularity will increase the reporting burden, especially for the larger ADIs.
Applicability for different types of institutions:
a.Bank ADIs: 10 reporting forms are mandatory and 11 reporting forms are conditional upon meeting the following thresholds – Repo & Security lending >= A$1b (1 report), Gross derivatives position >= A$ 1b (1 report), Margin lending >= A$150m (1 report), Total assets >= A$5b (1 report), Total assets >= A$10b (1 report), Business Credit >= A$2b (2 reports), Housing Credit >= A$6b (2 reports), Personal Credit >= A$ 500m (2 reports).
b.Non-bank ADIs: 2 reporting forms are mandatory and 13 reporting forms are conditional upon meeting the following thresholds – Total assets >= A$200m (3 reports), Repo & Security lending >= A$1b (1 report), Gross derivatives position >= A$ 1b (1 report), Margin lending >= A$150m (1 report), Total assets >= A$5b (1 report), Business Credit >= A$2b (2 reports), Housing Credit >= A$6b (2 reports), Personal Credit >= A$ 500m (2 reports).
c.RFCs: 2 reporting forms are mandatory and 18 reporting forms are conditional upon meeting the following thresholds – Total assets >= A$50m (3 reports), Total assets >= A$500m (6 reports), Repo & Security lending >= A$1b (1 report), Gross derivatives position >= A$ 1b (1 report), Margin lending >= A$150m (1 report), Business Credit >= A$2b (2 reports), Housing Credit >= A$6b (2 reports), Personal Credit >= A$ 500m (2 reports).
2.What are the other prominent changes to APRA reporting?
In addition to the reforms in EFS reporting, APRA is in the process of revamping many other supervisory reporting standards including
a.Revised liquidity reporting framework
b.Introduction of NSFR reporting mandate
c.Introduction of Standardised Approach for Counterparty Credit Risk management (SA-CCR)
d.Revisions to Large Exposure framework
e.Revisions to minimum ADI capital requirements (BASEL III final components)
f.Capital adequacy revisions
g.Introduction of Leverage Ratio
Increase in data relevancy, data granularity and data quality emerge as the core pillars across all these regulatory reforms ahead.
3.How do these regulatory requirements impact my business?
Apart from the monetary investment in upgrading the technology infrastructure, compliance with the prescribed data quality and accuracy frameworks will require re-alignment of processes to enable collection of data from disparate source systems.
This may involve considerable re-engineering of the current practices of recording and consolidating data. Moreover, given the prescribed data accuracy thresholds, a shift towards automation of processes has never been more critical.
4.What are the timelines to comply with the said regulations?
5.What are the new data requirements as per the revised EFS returns?
The key themes of EFS modernisation are ‘improve relevancy of data collected’, ‘increase accuracy of data reported’, ‘update data definitions to current national and international standards’, and ‘minimise data quality issues’.
While the mother report ARS 720.0 – part of phase 1, seeks balance sheet positions as on the reporting date, other returns require detailed breakdown of the balances mentioned in the mother report by instrument and by counterparty.
a.Segmentation of instruments by contract attributes such as ‘fixed or floating rate loans’, ‘at call or not at call deposits’, etc.
b.Split of outstanding loan and lease balances by purpose of lending such as ‘owner-occupied home loans’ Vs ‘Investment purpose home loans’
c.Reporting of Individual and collective provisions, days overdue, maturity, securitization status for loan and lease finances
a.Counterparty industry and sectoral classifications have been updated as per the latest ANZSIC and SESCA codes, industry classifications have witnessed change at each level of classification while two new sectors, ‘Investment funds’ and ‘Securities’, have been added to sectoral classifications.
b.Split of outstanding balances by residents and non-residents, related parties etc.
6.How are the configurations being applied to the new EFS reports?
New EFS reports have been configured to ensure both consistency in data definitions across reporting forms and reconciliation of data reported at the lowest level of granularity (sought in one report) with their aggregated and GL level balances (sought in another report).
To this effect, the data quality frameworks set out in RPG 702.0 ensure that the reported data conforms to the stipulated accuracy thresholds.
7.How should I provision data for the solution?
Conducting a thorough data gap analysis with the new requirements could be the first step towards building a robust data acquisition and alignment strategy for the solution.
Presence of disparate core banking systems warrant use of consistent data dictionaries across source systems along with end to end data trail and audit mechanisms to satiate the data quality and accuracy thresholds as laid out by APRA.
III.Cloud and Information Security
8.How do I decide between an on-premise and a cloud-based solution?
The cloud infrastructure has evolved to provide subscribers a fast, reliable, safe and scalable platform in a cost-effective manner. Unless you have extensive customization requirements, a cloud-based solution provides seamless experience without having to worry about hardware sizing and procurement, long and expensive implementation timelines and the likes.
9.How safe is my data in the cloud architecture?
Argus has partnered with IBM to provide an extremely secure environment that ensures safety of your data and prevents malicious attacks. Every client will have a unique URL and is redirected via a secure web gateway that can detect any impersonation, fraudulent access etc. The entire installation will have a second firewall placed to prevent accesses from potentially dangerous IP zones as well. In the further interest of security, we ensure that a separate instance of our market leading platform is provisioned for each client – that eliminates any chance of data leaks.
10.What are the Disaster Recovery mechanisms in place?
The Argus cloud is built to have an inbuilt business continuity. The cloud platform provides for the ability to have a mirror environment brought up in quick time. Further, pre-scheduled weekly/monthly backups are created to be able to restore to a “point in time”, anytime!
11.Will my data remain in Australia or hosted outside the country?
To ensure complete compliance to local regulatory laws and data privacy, the cloud installation of this solution is hosted locally, within Australia. No data leaves or moves out of the geographic boundaries of the country!
12.Does your application support multi-factor authentication?
Multi-factor authentication is part of our product roadmap.
13.What are the kind of data encryption techniques applied in the proposed solution?
We use ‘sftp’ protocol which does data encryption during transmission and ‘https’ to ensure data is secured during application access. Additionally, we store the data on a standard RDBMS, eliminating the need for any additional encryption.
14.What happens to my data in the event of discontinuance of your service?
The subscriber can download the data via reports/screens that the application provides within the notice period of termination. Post discontinuation of service, both the data as well as the application instance hosted for the bank will be destroyed.
15.What are the data quality maintenance features in the solution?
Our solution has an in-built ‘Data Profiler’ tool which can be used to detect possible issues with data at the time of loading. This tool is equipped with mathematical, logical, and relational operators using which users can configure and run various checks on data at the time of loading. The checks include but are not limited to checks on variances w.r.t. data from a previous upload date.
16.Does the solution provide a drill-down of the reported/computed numbers?
Our solution is equipped with an n-level drill-down framework which allows easy navigation from reported fields to their driving components. The solution offers the following features:
a.Direct one click drill-down from any cell on the report
b.Drill-down on a specific report line item to access all the underlying granular data
c.Drill-down at Rule Level, Account Level, Transaction Level and GL Level
d.Drill-down and download the underlying data tables, where applicable
Export downloaded underlying data tables to csv files.
17.Does the solution support adjustments?
Yes, our solution allows users to adjust data before report submission. Users can directly adjust the data-point being reported or they can adjust various attributes at the contract level. Our solution also allows users to adjust GL balances to overcome data quality issues at the source systems. Users can capture comments against adjustments made and use an approval workflow for review. The solution maintains full audit trail for all adjustments made and generates a summary report which can be used for review.
18.Can I apply inter-intra report validations?
Our solution has a user-friendly interface with in-built mathematical, logical, and relational operators using which users can set up validation checks between report line items, both within and across reports. Specifically, users can perform the following functions using this utility:
a.Set up validation checks to check for mathematical and logical relationships between data points
b.Configure actions ranging from raising alerts to stopping submissions in case of errors
c.Track and stop submissions based on pre-defined Standard Deviation and Variance levels
19.Can I see a workflow of the report as it transitions from one stage to another during production process?
Our solution has an in-built ‘Review Process Flow’ engine which provides a GUI with a drag-and-drop tool for creating any number of user-defined workflows. The workflows are completely parameterizable with no limit on the number of levels in the approval process. Workflows, once created, can also be easily modified to include new users, user levels, and even to change the functions performed by any roles. The Review Process Flow engine generates alerts which allows makers and checkers to track and monitor reports and complete approval process within pre-defined timelines.
20.What are the user level security/privilege management features?
Our solution provides a user interface for managing user creation, role creation, role assignment, and privilege assignment for accessing various reports and artefacts.
21.What is my role in the implementation cycle?
All banks who subscribe to Argus’ cloud-based APRA reporting service will receive a walkthrough of Argus’ Data Reception structure. Banks will then need to use Argus’ Data Integration layer to load the mapped data extracts from their source systems into Argus’ Reception Area. Banks will also receive a Functional Specifications Document providing details about a comprehensive set of pre-built data profiles on internal reporting taxonomies (derived dimensions) covering all reporting fields. Banks will then need to configure business conditions as applicable by leveraging the input reporting taxonomies and load the configured data into Argus’ Data Mart for consumption by pre-built reporting rules. The solution will automatically generate all the applicable templates for the reporting date.
22.What is the typical implementation timeframe?
A typical implementation timeframe for a reporting standard like APRA EFS will be 9 to 12 months (for the completion of all 3 phases), after the subscriber has augmented their source systems with missing data fields.
23.What are the critical success factors to comply with the stated timelines?
The following are the critical success factors to comply with the stated timelines:
a.Conducting a data gap analysis and augmenting the source systems with missing data fields
b.Being able to robustly map data extracts obtained from various source systems into reporting taxonomies
24.How do I validate the system generated returns?
Banks can validate system generated returns in the following ways:
a.Using configurable rules for reconciling both within and across reports
b.Using report drill-down feature to review details at the most granular level
c.Using system-generated worksheets which provide step-by-step computation details for exposures, collateral apportionment, and facility apportionment
25.What is the policy on errors and/or omissions in the reports?
Argus will ensure there are no errors and/ or omissions resulting from incorrect business logic used for creating pre-defined internal reporting taxonomies as well as incorrect pre-built rules used for generating the returns. However, the subscriber shall have checks and balances in place to avoid any errors and/ or omissions resulting from poor data quality, incorrect data mapping, incorrect configuration of business rules etc.
26.How will you cover the ongoing updates/changes released by the regulator?
Argus constantly monitors updates or changes released by regulators and updates its pre-defined internal reporting taxonomies as well as pre-wired rules for report generation. All such product upgrades driven by regulatory changes will be released to Argus’ clients independent of software upgrades/ releases.
27.What is your application support/maintenance model?
With the Argus’ cloud-based APRA reporting service, each customer will be covered as part of our Annual Maintenance Agreement with pre-defined SLAs covering fixes for defects in the core platform and solution features and access to updates and upgrades, as available. Such a support will be available as per the business hours & calendar in Australia.
28.What is the annual cost of the solution?
The Argus’ cloud-based APRA reporting service follows a self-explanatory annual pricing model which shall be provided basis the definition of project scope, size and scale of operations, number of users and any other specific determinant (as per the bank). The applicable annual pricing is inclusive of the Software License & Annual Support.