Real time reporting vital for West African banks to become Basel 2 compliant
As the Nigerian banking sector races to become Basel 2 compliant, innovation becomes critical in helping banks establish more efficient processes, increase transparency and become more customer centric. SAP Africa strives to provide the banking sector with agile financial solutions designed to deliver detailed regulatory reporting, on a single data platform , with the ability to handle mass analysis within seconds.
Countries all over Africa – including Nigeria which is the largest economy - are making every effort to increase their levels of regulatory compliance to keep up with legislative and economic requirements for analysing financial data, including threats and risks.
“SAP Africa, in partnership with EY (Ernst and Young), are committed to transforming the banking sector in Nigeria to become Basel 2 compliant and take advantage of the Big Data analytics solution for real-time reporting,” says Darrel Orsmond, Head of Financial Services for SAP Africa. Through this technology, the banking sector will be in a competitive position to provide rapid assessment of capital, reporting to the Regulator for compliance and delivering of reports in real time, according to Orsmond.
Orsmond adds, “The average timeframe for banks to become Basel 2 compliant can be as much as 18 months, and banks should start preparing well in advance for Basel implementations. These preparations should include technology investments in risk management, real-time reporting, data analysis and cleansing capabilities.”
“By identifying and eliminating risks in advance through the use of real-time reporting, banks can satisfy the needs and demands of stakeholders thereby reducing risk and increasing regulatory compliance.” Orsmond commented,” Banks that are not Basel 2 compliant could run the risk of not pricing their loans correctly, thereby not holding the appropriate levels of capital.” He further added that accurate bank data is vital to reach Basel 2 compliance and often the biggest challenge and cost of implementation is not the software itself, but rather the time it takes to implement, caused by inaccurate bank data and a shortage of the required mathematical and modelling skills.
Precise records of losses and the legal processes involved, are essential inputs to ensure the accurate prediction of potential losses. Banks need to hold just the right level of capital, and poor data usually leads to Banks having to carry excess levels of capital.
Darrel Orsmond addressed the issue of regulatory compliance at the SAP Basel 2 – Regulatory and Reporting Demands for Big Data event being held in Lagos, Nigeria on 27 May 2014 and is available for comment.
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