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Banking Industry Compliance Challenges in Philippines

The Bangko Sentral ng Pilipinas (BSP) has announced a significant overhaul of its regulatory reporting requirements for the banking sector. The aim is to improve automation, strengthen surveillance, and promote overall safety and soundness of the financial industry.

Simplification of Reporting Requirements

As part of this effort, the BSP is introducing an XML- based submission mechanism to replace Excel-based reports. According to BSP Deputy Governor Chuchi Fonacier, the new system will reduce the number of reporting templates from 18 to a single file, and the number of data points from 107,000 to around 50,000.

  • “Before, banks would have to submit 300-plus schedules in varying complexity with voluminous data points,” Fonacier said. “Now, we were able to reduce it to a single file.”
  • The new submission mechanism is part of FRPv15, which will require XML for FRP and FRP-related reports. Excel-based report submissions will no longer be allowed for these reports.

Improved Validation and Processing

The BSP has also improved its validation, processing, and feedback mechanism, with processing time reduced from about an hour to less than a minute. This change is expected to redefine the operating model for financial institutions in the Philippines.

  • “Financial institutions will need to enhance their end-to-end reporting architecture to address current needs as well as the desired operating model,” said Subbaiyan Vaithinathan, head of financial regulatory products for Asia Pacific at Adenza.
  • The parallel run starts in April, covering March 2023 quarter-end reports and month-end reports for the second quarter. During this period, banks can use an XML converter facility provided by the BSP to facilitate reporting.

Automation Requests

The change has triggered a wave of automation requests both tactically and strategically in almost all financial institutions in the Philippines. Banks are seeking to achieve a future-proof target operating model for overall regulatory reporting to ensure they can address changes from the BSP.

  • “Financial institutions are seeking to achieve a future-proof target operating model for overall regulatory reporting,” Vaithinathan said.
  • Fonacier added that XML-based reporting will allow for a more streamlined process for updating the BSP’s requirements, whether new data needs to be reported or certain data is discontinued. The change is expected to enhance data acquisition, speed, and quality of data visualization and analytics.

Industry Roundtable

To discuss the move to FRPv15 and its related impacts and opportunities, Regulation Asia and Adenza are jointly hosting an industry roundtable on May 11, 2023. For more information, email [email@protected].