Upgrading processes are becoming increasingly complicated due to the continuous advancements in data standards, as stated by Citi's Chief Financial Officer.
In a move to enhance its regulatory compliance, Citi, one of the world's leading global banks, is focusing on improving data quality in its regulatory reporting. This initiative is part of a broader industry-wide response to address challenges in regulatory reporting.
Citi's Strategies for Regulatory Reporting Improvements
Citi is taking a multi-pronged approach to address data quality issues in regulatory reporting. Key strategies include:
- Strengthening Data Governance and Internal Controls: Citi is moving beyond a checkbox approach to compliance by ensuring robust data governance frameworks that oversee the entire data lifecycle and reporting process. This includes demonstrating control and confidence in the accuracy, reconciliation, and traceability of data submitted to regulators, which improves trust in regulatory outputs.
- Implementing Advanced Technology Solutions: Artificial intelligence (AI) and specialized automation tools are being used to address data fragmentation, reduce manual errors, and ensure ongoing compliance while reducing manual workload, particularly for complex regulatory areas.
- Regulatory Support and Standardized Reporting Frameworks: Regulatory bodies like the Office of the Comptroller of the Currency (OCC) provide detailed guidelines and reporting systems, which help banks submit complete and timely data. These frameworks emphasize accuracy, timeliness, and completeness of data to facilitate effective supervision.
- Ongoing Regulatory Updates and Harmonization Efforts: Updates in regulatory reporting requirements encourage banks to continuously adapt data collection and reporting practices to remain aligned with evolving regulations, ensuring resilience and financial stability.
- Proactive Risk and Data Quality Management: Post the 2008 financial crisis and recent market volatility, banks and regulators demand real-time readiness and resilience, focusing on prudential risk management supported by reliable data quality in regulatory reporting.
Citi's Financial Outlook
Citi's Chief Financial Officer, Mark Mason, spoke at a Goldman Sachs financial services conference in New York City, revealing that the bank expects investment banking fees to increase by 25% to 30% year over year. This increase is due to strength in mergers and acquisitions, equity, and debt capital markets.
In addition, Citi still anticipates full-year expenses to be near $53.8 billion. Mason defended the company's spending this year, emphasizing the need to increase spending on transformation and risk and control work.
Regulatory Matters
Regulatory feedback and spending continue to be a focus for Citi. The enforcement actions against Citi by the Federal Reserve and OCC were in October 2020, and the bank was fined $135.6 million in July 2021. However, regulators have noted Citi's progress on data and regulatory reporting improvements, but also cited the bank for not being far enough along in that work.
Citi is planning to purchase licensing rights, and the bank spent $12.2 billion on technology last year. The bank has gained share in the investment banking segment, following the hiring of Vis Raghavan from JPMorgan, and Citi's CEO, Jane Fraser, has stated that the bank is making changes to its approach to data for regulatory reporting.
The bank's top priority remains the execution of the transformation, as per CEO Jane Fraser's statement. This transformation, coupled with the bank's strategic focus on regulatory reporting improvements, positions Citi well for the future of the banking industry.
[1] OCC.gov, "Supervision and Regulation, Bank Information System," [Online]. Available: https://www.occ.gov/topics/supervision-regulation/supervision/banks/bif-system.html
[2] McKinsey & Company, "Regulatory reporting: The road to resilience," [Online]. Available: https://www.mckinsey.com/industries/financial-services/our-insights/regulatory-reporting-the-road-to-resilience
[3] Single Resolution Board, "MREL/TLAC reporting templates," [Online]. Available: https://www.srboverview.europa.eu/SRB-activities/Risk-assessment/MREL-TLAC-reporting-templates_en
[4] Deloitte, "AI and regulatory reporting: A new era for banks," [Online]. Available: https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/about-deloitte/gx-uk-regulatory-reporting-ai-whitepaper.pdf
[5] European Commission, "EU Taxonomy Climate Change: Delegated Acts," [Online]. Available: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-climate-change/eu-taxonomy-delegated-acts_en
Technology plays a critical role in Citi's strategic focus on regulatory reporting improvements, as the bank implements advanced technology solutions to address data fragmentation, reduce manual errors, and ensure ongoing compliance, particularly for complex regulatory areas.
The bank spent $12.2 billion on technology last year and is planning to purchase licensing rights, demonstrating a commitment to leveraging technology to enhance its regulatory reporting capabilities and maintain compliance with evolving regulations.
