How Culture Can Help Banks Comply with EU Financial Regulations

Strategy   |   James Fernando   |   Jun 22, 2023

Changes to the EU regulatory landscape have profoundly altered the way financial institutions must operate. I’m talking about everything from how we structure our teams to how we organize our workflows. Even the way we define the talent pool from which we hire.

How can we keep up with the pace of change? I believe the answer is to create and nurture what I term a “Swiss Army knife” culture with an automated analytics platform like Alteryx as the backbone. By doing so, we can empower a larger number of people to intervene across the regulatory reporting value chain.

My team at Societe Generale Global Solution Centre in Romania did this and we were able to impact our broader digital transformation in meaningful ways. Allow me to share a bit more about how and why we did it.

Satisfying new reporting requirements

Regulators have become increasingly demanding in their need for more granular data and in how they are looking at that data. For example, we’ve seen a huge increase in the number of inter-reporting controls that regulators are putting into place between different types of report.

We are also seeing the emergence of new types of reporting that require data that often doesn’t even reside within the bank, such as extra financial data used for ESG reporting. As a result, there’s a growing need to work with multiple heterogeneous data sources and to be able to integrate data from lots of different platforms, even from outside the group. It’s also important to be able to check data that is being produced in different systems to see if it’s consistent.

As we’ve seen through reports like AnaCredit, regulators can be demanding in terms of how they look at data sets containing tens of millions of data points. Once they have accumulated historical data, they start slicing and dicing data in all directions. They start detecting outliers and reconciling with other data sources. Sometimes across different banks.

In order to meet regulatory reporting requirements, we used to rely entirely on reporting experts. But over the last three years, we’ve built out a complementary mix of data and reporting expertise in Bucharest. Now, we essentially have about 45% of our people on the reporting side, 45% on the data side and 10% transversal. It has fundamentally changed the way we’re organized.

Reducing turnover rates

A strong focus in recent years has been on the need to reduce staff attrition. Just 3 years ago, we had a turnover rate of more than 40% and now it’s down to around 10%. We didn’t just fundamentally change how we’re organized – we became a more agile structure.

The deployment of our innovative production line model developed with Alteryx has played a key role here since we have been removing repetitive, demotivating tasks that bring low added value and replacing them with more engaging value-add activities.

We have embraced an agile setup across the different teams in the department and have organized ourselves into squads, chapters and a tribe, which also includes our IT colleagues in Bucharest. I’ve found it’s important to break down silos between teams.

Furthermore, by developing and maintaining these production lines, we automatically enhanced the ownership and autonomy of the teams, with this increased ownership of processes helping the teams feel more connected to what they’re doing. This has also spurred a positive impact in terms of engagement and motivation.

How do we know? We have an employee satisfaction barometer that we monitor once a year at the level of the Group. Between 2019 and 2022, we saw an increase of 26 points in employee engagement at the level of my department. This transformation has been very much underpinned by this overarching organizational change and it affects people’s outlook.

Creating a “swiss army knife” culture

When we consider recent graduates during the hiring process, we no longer say that we just want finance graduates. We are equally looking to hire people who work with data and who bring other skills to the table, such as data visualization. We are interested in having this mix of data and regulatory reporting expertise.

We’ve developed a concept we like to call “Swiss Army Knife” profiles. Rather than hiring people who just work in specific areas such as financial reporting (FINREP), common solvency ratio reporting (COREP) or liquidity reporting, we want people who can work across the whole regulatory reporting value chain. They can intervene in every area. The idea is that this way we can become more efficient because we don’t have the same peaks of activity in each team. If you have people who can intervene across the value chain, then you can work more efficiently.

In addition, because we’ve taken a modular approach to how we build our production lines based on an 80% generic/20% specific model, we are nurturing this Swiss Army Knife culture in all our teams. Somebody who’s worked on the generic Alteryx engine for FINREP can also work on the generic engine for COREP. It makes it much easier to build resilience across teams and facilitate interaction between teams.

For example, the decision was recently taken to position some ESG activities in Bucharest precisely because we have the analytics capabilities and because we are recognized as being ahead of the curve within the group in terms of Alteryx capabilities. And we have positioned ESG not in one team but across several teams because by its very nature it’s multidisciplinary in terms of the reporting and data skills required. It is also something on which a lot of people are excited to work.

This also reflects the agile approach that we’ve been putting in place since we started deploying our Alteryx production line strategy. We tend to work in four- to six-week sprints. I meet with the Alteryx squad within each reporting team in the department once a month to prioritize the workflow development backlog, and our Alteryx tribe meets every two weeks to share experiences and learn from what has worked and what hasn’t worked. It’s thrilling to see our team becoming so agile and it’s comforting to know that whatever new requirements the regulators may throw at us, we’ll be more than ready to adapt.

James Fernando is Regulatory Reporting Director at Societe Generale Global Solution Centre in Romania.

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