IReF

What is the Integrated Reporting Framework (IReF)?

Since the financial crisis in 2008, financial institutions are facing ever-increasing regulation and reporting requirements. This steep rise of reporting obligations has proven a significant challenge for the banks, as well as for supervisory authorities. Ensuring data quality, coping with redundancies and a lack of harmonization are only a few of the ensuing problems. In addition, cross-border banks have to report to multiple national authorities according to varying requirements in the countries in which they operate, increasing the demand for resources and cost of the compliance. 

The Integrated reporting framework (IReF) is an initiative of the European Central bank (ECB) to standardise, harmonise and integrate existing European System of Central Banks (ESCB) statistical frameworks across countries and reporting domains, with the main objective to reduce the reporting burden on euro area banks in line with the principle of collecting data once for multiple statistical purposes. This involves a significant shift from submitting aggregated data in templates to providing granular, transaction-level data. The project has now officially moved from its design phase into the realisation phase.

Objectives of IReF

The framework is supported by cost-benefit analyses (CBAs) conducted by the ECB with the banking industry. Its primary objectives are to:

• Reduce reporting burden: Lower the long-term cost of compliance by harmonizing data definitions and eliminating redundant data requests.
• Improve data quality: Enhance the consistency and comparability of data across all institutions and countries through a common data model.
• Enhance Supervisory analysis: Provide regulators with more granular data to support analysis and potentially reduce the need for ad-hoc data requests.
• Foster integration: Promote alignment between statistical and prudential reporting, with a key focus on closer integration with the FINREP solo framework.

IReF scope

IReF will integrate and replace several existing ESCB statistical reporting frameworks. The collection will be based on a single, granular data model, initially consolidating datasets for:

• Balance Sheet Items (BSI)
• Monetary Financial Institution Interest Rates (MIR)
• Securities Holdings Statistics (SHS)
• Analytical Credit Datasets (AnaCredit)

The framework also aims to address reporting complexities for cross-border banking groups, such as the 'home-host' approach.

Key phases and implementation timeline of the IReF program

The ECB has published a timeline giving firms enough time to prepare their systems. However, institutions need to be prepared for a parallel run of both old and new reporting systems during the transition. 

IReF timeline

Challenges and implications for banks

The move to IReF represents a paradigm shift in regulatory reporting, presenting significant challenges and implications for financial institutions.

• Fundamental re-architecture: The shift from aggregated to granular data is not a simple update; it requires a strategic re-architecture of legacy data ecosystems and reporting infrastructure.
• Managing data volume: The exponential increase in data volume will place significant strain on existing systems, demanding highly scalable and performant technology platforms.
• Parallel run complexity: The transitional period will require banks to manage a parallel run, submitting reports under both old and new frameworks simultaneously, which increases operational complexity and cost.
• Holistic regulatory view: IReF is part of a broader wave of data-intensive regulations. Firms must approach it as part of a holistic data strategy, not as an isolated compliance exercise.

Navigating the IReF transition

Financial institutions will need to adapt their reporting infrastructures to address complex data and reporting challenges. Regnology’s regulatory reporting solutions offer standardization from granular data to reports including data dictionaries, models and processing logic. It enables to automate and simplify data transformation, report generation, and distribution allowing FIs to respond faster to new requirements such as IReF.