Building societies remain an integral part of the financial landscape, providing a secure and ethical alternative to commercial banks. They are member-owned organisations, primarily concerned with helping local communities by offering savings accounts, mortgages, and other financial products/ services.
However, the world of finance is continuously changing, and building societies are no exception. Regulatory requirements for ensuring financial stability and consumer protection are getting more complex. This increasing complexity poses a substantial challenge to building societies, necessitating additional time, resources, and rigorous attention to detail in their regulatory reporting processes.
The key to navigating these stormy rivers is digital transformation. Building societies can satisfy these changing legal requirements and reap a multitude of benefits that improve accuracy, efficiency, and overall business performance by adopting cutting-edge technologies and optimising processes.
Building Societies in Regulatory Reporting: The Present Scenario
In recent years, building societies have faced a major increase in regulatory reporting requirements. Meeting these needs frequently relies on outdated processes and fragmented data systems, which present various issues. Let’s examine the current situation in more detail:
Manual, Time-consuming Data Collection and Consolidation
Regulatory reports necessitate a large amount of data from multiple sources within the organisation, including client information, financial activities, and so on. Usually, this data is collected and compiled manually, leading to:
- Inefficiency: As Staff spend a significant amount of time gathering data from spreadsheets, emails, and other software systems, it reduces productivity and increases operating costs.
- Human Error: Manual data entry is subject to errors. Typos, discrepancies, and missing information can result in erroneous reporting and regulatory fines.
Difficulty Maintaining a Single Customer View Across Systems
Customer data is frequently spread across multiple platforms in building societies. This makes it impossible to gain a holistic understanding of each customer’s interaction with the community, which hinders
- Accurate Reporting: Insufficient or inconsistent consumer data across systems might cause problems in regulatory filings.
- Informed Decision-Making: Without a unified customer picture, it is difficult to personalise services and recognise potential risks for specific clients.
Defects and Inconsistencies in Reporting
The manual method of data collection, and the lack of a single customer view lead to errors and discrepancies in regulatory reporting. These errors can have severe repercussions, such as:
- Regulatory Penalties: Regulators can levy fines for incorrect or incomplete reporting.
- Reputational Damage: The reputation of the building society and client trust could be compromised by openly reported errors.
Lack of Real-Time Data for Making
By relying on manual processes, data becomes obsolete and siloed. The lack of real-time access to regulatory data makes it challenging for building societies to:
- Proactive Risk Management: Taking preventative measures to address regulatory compliance issues.
- Optimise business strategies: Make data-driven decisions to increase operational efficiency and satisfy changing regulatory requirements.
Case in Point: Grant Thornton Sanctions
Grant Thornton UK was sanctioned in April 2024 by the Financial Reporting Council when it failed to comply with regulations while auditing the local authority’s pension fund for the year ended March 31, 2021. This scenario demonstrates the potential effects of manual processes and fragmented data on achieving regulatory obligations. Building societies, with their complicated client interactions and financial transactions, are especially vulnerable to such risks.
These issues make it evident that the status of regulatory reporting for building societies is unhealthy. Digital transformation provides a road forward, allowing for a more efficient, accurate, and data-driven approach to compliance.
How Digital Transformation Empowers Building Societies to Meet Regulations
The financial sector is turning digital, including building societies (BS). By embracing digital transformation, Building Societies can improve their capacity to meet regulatory requirements and stay competitive. Let’s have a look at how digital tools and technology might help handle data difficulties and, eventually, streamline compliance operations.
Digital Transformation: An Advantage for Regulatory Compliance
Digital transformation is the process of incorporating digital technologies into all elements of an organisation. In the framework of Building Societies, this includes implementing cutting-edge technologies and procedures to automate work, optimise data management, and boost customer experiences.
This shift has profound consequences for regulatory compliance. Building Societies are subject to a never-ending stream of intricate rules and regulations, such as KYC and Anti-Money Laundering (AML) mandates. Therefore, it is typical for inaccuracies and errors to happen, as data is collected and reported using traditional, manual methods. Digital transformation addresses these difficulties by:
- Transforming Data Collection and Automation: With digital tools, data can be automatically retrieved from various sources, cutting down human error and saving time.
- Enhancing Data Accuracy and Consistency: Automation promotes data consistency across multiple platforms, minimising the risk of errors and irregularities that regulators could identify.
- Enhancing The Timeliness and Efficiency of Reporting: Digital platforms can automatically generate regulatory reports, which guarantees timely submissions and eases the workload of compliance teams.
- Boosting Transparency and Auditability: With digital tools, authorities can readily trace data flow and spot issues since they provide a clear audit trail.
Digital Tools and Technologies for Regulatory Compliance in Building Societies
Several digital tools and technology can enable Building Societies to effectively manage the regulatory framework.
- Cloud-based Data Management Platforms: Cloud solutions provide regulatory data with safe, centralised storage, enabling quick access and cross-organisational cooperation.
- Automatic Data Extraction and Reporting Tools: These tools collect data automatically from numerous sources, like customer signup forms and transaction records, cutting down on manual work and errors made by individuals.
- Data Analysis and Visualisation Tools: BS uses data analytics techniques to analyse trends, patterns, and potential issues, facilitating proactive financial regulatory compliance procedures. Data visualisation technologies can provide complicated regulatory data in an understandable and succinct style, allowing for better communication and decision-making.
- Regulatory Technology (Regtech) Solutions: RegTech solutions are made especially to deal with financial industry compliance issues. These tools can automate regulatory reporting such as FSCS SCV, CRS/FATCA, BBSI, MiFID and monitor for potential regulatory breaches.
Advantages of Going Digital
By adopting digital transformation, building societies can realise a myriad of benefits beyond greater regulatory compliance:
- Efficiency: Digital solutions expedite operations, decrease manual tasks, and eliminate redundancies, resulting in greater productivity and lower costs.
- Customer Experience: Modern digital channels offer customers a seamless and accessible experience, promoting loyalty and satisfaction.
- Compliance: Digital tools enable regulatory adherence, lowering the risk of penalties and brand harm.
- Risk Mitigation: Digital transformation improves data security and protection measures, protecting consumer information and reducing the risks of fraud and cybercrime.
MG as a Partner for Building Societies in Digital Transformation
Macro Global (MG) helps building societies navigate the regulatory difficulties of Financial Services Compensation Scheme (FSCS) reporting requirements. The FSCS Single Customer View Enterprise Solution Suite serves as a catalyst for digital change in building societies by
- Streamlining operations
- Improving data accuracy
- Increasing overall efficiency
MG’s FSCS SCV Solution Suite includes SCV Alliance and SCV Forza, which are intended to meet the special regulatory reporting demands of building societies in compliance with FSCS standards. Their tailored approach ensures smooth integration with current systems and processes in building societies.
MG also provides business consulting services, with an emphasis on data governance and operational best practices in the FSCS reporting environment.
MG plays a critical role in assisting building societies in mitigating the risks associated with FSCS reporting by adopting the FSCS Single Customer View Enterprise Solution Suite, which addresses compliance gaps, minimises errors, and ensures accurate and secure regulatory reporting.
MG’s SCV alliance and SCV Forza streamline the process of FSCS regulatory reporting by providing tools and technologies to automate, validate, and generate accurate SCV reports, ensuring a smooth submission to the FSCS.
MG has an established track record of successful collaborations with building societies, as indicated by client comments and case studies that emphasise the efficiency and dependability of their solutions for addressing FSCS reporting difficulties.
MG’s commitment to regular upgrades ensures that building societies stay ahead of the ever-changing regulatory landscape, ensuring quality, integrity, and future compliance requirements.
Ready to streamline compliance, achieve digital transformation, and unlock growth potential?
- Contact MG today for a free consultation and discover how their solutions can empower your building society.
- Visit the MG website to learn more about their RegTech offerings and the SCV suite.
SCV Alliance
FSCS SCV Audit Platform
