DATA ANALYTICS

Reduce Costs and Headaches By Easing Financial Services Regulatory Compliance

Julian Alvarado

Sr. Content Marketing Manager, Sigma

The financial services and technology industry is on fire, with recent IPOs from the likes of Robinhood and Coinbase and the explosion of FinTech startups determined to disrupt legacy institutions.

But as the saying goes, “more money, more problems,” and for financial services companies, compliance and regulatory reporting is a major challenge. In 2020, financial institutions in the US alone were fined $11.11B for violating regulations like anti-money laundering protocols, personal data leaks, and more.

On the surface, it’s easy to write this off to a few “bad apples.” Still, new and complex regulations are proving to be a challenge even for the most diligent financial institutions because of the massive volume and sensitivity of the data they collect.

In this article, we’ll explore why traditional BI tools – and especially traditional spreadsheets like Excel – weren’t built for the speed and scale at which modern financial institutions operate and how embracing modern cloud analytics can help these organizations:

  • Improve brand trust and customer satisfaction
  • Minimize exposure to financial risks
  • Ensure good-standing with regulatory bodies

What Is Compliance Reporting?

Compliance reporting refers to when a financial institution submits raw or summarized data to auditors, evaluating its adherence to financial laws and regulations. This requires teams to maintain exceptionally clean and complete historical records to respond to regulatory requests promptly.

Failure to respond to regulatory requests within a given timeframe or to deliver accurate compliance reports can result in legal investigations, fines, lawsuits, loss of customer trust, and poor brand reputation.

Adhering to compliance and regulatory mandates typically falls on the shoulders of two teams: compliance and finance. Compliance teams are responsible for establishing, maintaining, and monitoring the internal protocols necessary to adhere to compliance mandates and pass regulatory audits. For their part, the finance team works together to update accounting processes and reporting protocols to avoid risk and meet new or changing regulatory reporting requirements.

Compliance and Regulatory Reporting: Traditional BI and Spreadsheets vs. Sigma

The financial services industry has been under increased pressure from regulatory bodies worldwide since the 2008 Global Financial Crisis. The demand for transparency has driven up the costs of compliance for financial institutions, primarily due to the growing number and complexity of regulations and faster reporting requirements.

And traditional BI tools and spreadsheets make adhering to these requirements extremely difficult for finance and compliance teams. Does this workflow look familiar?

The traditional analytics workflow

62% of people use spreadsheets to explore data because of their ease of use and flexibility. But the limitations of spreadsheets make adhering to regulatory requirements extremely difficult for finance and compliance teams for a couple of reasons.

Traditional spreadsheets are slow down or crash under pressure

Organizations in highly regulated industries are required to store massive amounts of data dating back many years. But traditional spreadsheets were not designed to leverage the cloud’s speed, power, and scale and slow down or crash with these large datasets:

Additionally, regulatory reporting often involves collecting data from dozens of data sources. Integrating and doing analysis across all of these disparate data formats and nomenclatures is a major headache, and it’s not uncommon for risk and compliance teams to face data governance issues that prevent them from speaking the same language and delivering accurate reports.

Sigma mitigates these problems by tapping into the unlimited scale and speed of the cloud data platform to allow users to analyze billions of rows of data at once without any performance issues. This includes semi-structured data like JSON and log files and decades-old transaction data appended by CSV.

Sigma also functions as a common language platform where data and compliance experts can collaborate on data validation, data exploration, and analysis of massive data sets to rapidly find rich insights. Technical teams can use Sigma to curate datasets for business teams where sources are linked, and calculations are clearly defined. Business teams can explore the data freely within these endorsed, governed paths.

Spreadsheets extracts are a nightmare for data governance and compliance

Every year, organizations spend millions on infrastructure, security solutions, data management systems, governance initiatives to protect themselves from data breaches. Yet, despite all of the money, time, and resources that go into safeguarding data, one of the most basic, common, and ultimately harmful risks often goes overlooked: data extracted to spreadsheets by business users.

Sigma’s direct, governed connection to the cloud data platform breaks down barriers between audit and risk teams and the answers they need. Its spreadsheet UI gives audit and risk teams the ability to quickly and independently respond to ad hoc requests with confidence that the data is accurate and fresh.

Success Story:

Cowen Creates a Communal Environment for Self-service Analytics and Eliminates Ad-hoc Requests with Sigma

As a publicly-traded financial institution, Cowen Inc. is required to store and retrieve data about each individual transaction –– up to 11 million traders per day –– to maintain regulatory compliance. But Cowen’s trade processing and record-keeping system introduced significant hurdles for business users because it required SQL expertise to access this historical data.

Every data request had to go through the IT department, which then provided the data in the form of siloed, stale, error-prone Excel worksheets. Cowen needed a user-friendly solution that allows business teams to have a holistic view of the data while allowing them to respond to regulatory requests quickly and efficiently.

Today, Sigma empowers teams across Cowen to independently access and analyze historical data and take a holistic approach to their analytics. Sigma’s ability to manage Cowen’s 5 billion+ row worksheets and drill down into row-level data while remaining performant has eased the burden of meeting strict regulatory requirements significantly.

If we receive a regulatory inquiry or an inquiry from auditors, anyone can now go into Sigma, easily retrieve those records for any given date, and provide them with confidence, knowing the data is accurate

Ross Levin

Managing Director, Global Clearing, Settlement & Securities Finance at Cowen Inc.

Stay Ahead of Regulators With Sigma

The impact of COVID-19 exposed the legacy technology and process deficiencies in banks and the need to improve their customer experiences at scale. At the same time, regulators are demanding higher levels of accountability from financial institutions.

As the industry races to catch up, organizations can embrace agile banking and compliance standards through technology and modern cloud analytics. Are you ready to take control of your analytics workflow? See how Sigma streamlines compliance and regulatory reporting with a free trial.

Are you ready to take control of your analytics workflow?

See how Sigma streamlines compliance and regulatory reporting with a free trial.