Getting Ahead on EBA Guidelines
The EBA issues new guidelines regularly to help keep the financial industry healthy and fair, but sometimes keeping-up with these best-practice ways of operating can be challenging. There is, however, always a pattern to these guidelines. There are vital points that they continuously come back to and reiterate time and time again, and if you can put the time and effort into getting them right, it becomes much easier to stay on top of all the changes that come your way.
So, what are these keystone topics that you should be paying attention to?
One of the significant trends we see being consistently brought up in the EBA guidelines regards governance. Specifically, calling on governance to promote more alignment within their financial institutions and recommending the governance emphasize interdepartmental communications. This is especially important for the delicate balance of push and pull in the Risk and Commercial departments. The closer these two departments can work together – despite having seemingly opposite goals – the better everything works. Governance should be working hard to ensure that these departments communicate frequently, effectively, and throughout all processes. It’s about dismantling the silos and creating effective cross-department communication channels.
Data and IT
Another major trend we see from the EBA guidelines overall is the recommendation that institutions put in the work and pay more attention to their data and IT processes and organizations—not having the correct data, or a high enough quality of data can negatively affect every aspect of businesses. And having multiple channels of data and how it’s collected often increases the margin for error (human and otherwise) so much that it can become next to impossible to explain the discrepancy in the numbers. The EBA consistently calls for more automation in these processes, leading to less variation and less error, thus increasing the trustworthiness of the data and eventually creating more peace of mind and easier reporting. It’s about improving confidence in the math while fostering more traceability and transparency.
Lastly, the EBA is always calling for more complete and quality reporting. Successful reports are naturally the collimation of good governance and strong data and IT functionality, but it’s worth addressing separately. Through excellent communication via solid governance and high-functioning data and IT departments, it’s important that reports reflect a good understanding of the guidelines – specifically that they all interpreted them in the same fashion. A report prepared for a stakeholder or a supervisor should be an accurate representation. This comes from good communication and trustworthy data born from a process with higher levels of automation.
The issue with EBA guidelines is that they’re always easier said than done, and although they are specific with what everyone should be doing, they never specify how they should be doing it.
At ACE, we specialize in the how. From customized analysis to pinpoint your organization’s strengths and weaknesses to promoting better communication between departments to making concrete, actionable plans to get your data and IT onto an optimal level, we can help, so don’t hesitate to get in touch.
As always, thanks for reading,
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