Ever greater volumes of data are becoming a fact of life for many central banks. Quite apart from those actively looking to harness big data for economic policy-making, new regulatory reporting requirements are generating billions of data points that will ultimately find their way onto central bank servers. For example, the European Central Bank (ECB) is planning to add to this mountain with its new 'AnaCredit' database, which will store details of loans throughout the eurozone.
In such an environment, good data management becomes paramount, and BearingPoint has been one of the first companies to offer technology support services to help central banks with this task. While its broader Abacus systems have been used for around 20 years in the private sector for data collection and analysis, Abacus/Regulator, which was specifically developed for central banks and financial regulators, was first implemented in 2014.
Maciej Piechocki, a partner at BearingPoint who has been closely involved with the development of Abacus/Regulator, says the project emerged from bespoke data collection systems the firm built for a major European central bank, among others. The problem with such a system is that it does not integrate well with other systems, is costly to design and can be very time-consuming to develop. "For a large central bank it takes years," Piechocki says. The central bank's bespoke initiative with BearingPoint took four years to complete.
In 2013, various central banks and national supervisors approached BearingPoint to ask the firm to consider developing an off-the-shelf product that would overcome some of these problems. BearingPoint set to work, but finished a few months too late for many Basel III-implementing central banks, which had to build their own systems. However, the National Bank of Romania approached BearingPoint in June 2014, asking if a system could be ready in time for the July 31 deadline.
Abacus/Regulator thus underwent its first test. The project began five weeks before the deadline, and finished four days early, on July 27. "We managed to report in July, and the data was good quality," says Simona Chiochiu, head of IT at the National Bank of Romania. "Both sides were proud of the performance."
Piechocki notes the dramatic difference between introducing Abacus/Regulator and a bespoke system. "When you have a standard product and standard practices for a central bank or supervisory agency you can really implement it in an extremely efficient way," he says.
The major European central bank has now returned to BearingPoint to implement Abacus/Regulator as well. It is keeping its bespoke model for other needs, but in April this year it signed a contract for Abacus/Regulator to handle Solvency II reporting by the 450-odd insurers in the country. Remittances have to be made within a narrow window, and between them the firms generate a huge volume of data. It was one of the largest projects BearingPoint had ever dealt with, and it went live in September.
BearingPoint has also worked with the National Bank of Austria on another data-gathering system built on the Abacus platform, called AuRep. The system is designed for Austrian banks to report regulatory data to the central bank. The banks operate the system and the National Bank of Austria provides the data model. The system went live in the second quarter of 2015. Johannes Turner, director of statistics at the National Bank of Austria, says BearingPoint invested a lot of resources in adapting Abacus to Austria's needs. The system is still being rolled out, but the signs are positive so far. "It works, it really works," he says.
One of the key strengths of Abacus/Regulator is that it covers the full "value chain", as Piechocki calls it. The system handles every element of the reporting process, from data collection to screening, workflow management, analysis, manual editing and final remittance. The user interface, handled within a standard internet browser, makes the system quite user-friendly.
Chiochiu says there were some rough edges to the system at first, built as it was on a platform designed for the private sector. But BearingPoint was "very open" during the process, and made adjustments based on many of the central bank's suggestions. "They were willing to find out what we needed, and have improved the system."
Many of the improvements have centred on Abacus/Regulator's analytical side. The system allows users to access any report submitted by a firm, and easily find information on submitters. The system also has tools to map data into a dashboard of key risk indicators, and BearingPoint's 'SmartCube' analyser allows users to handle highly granular data. If there is a problem, regulators can immediately contact the submitter via the system.
The interest in BearingPoint's off-the-shelf technology from other central banks around the world, according to Piechocki, may reflect a "changing mentality" among central banks. "A number of central banks are moving slowly away from doing everything themselves towards buying good software on the market," he says.
Indeed, the National Bank of Romania's Chiochiu points to a few expansion plans. She says the central bank is planning to roll out Abacus/Regulator to more banks in 2016, not only those that must report under CRD IV, and then to the whole banking system if everything goes smoothly. It is also making more use of the system's analytical capabilities, using the data for internal financial supervisory purposes as well as remitting it to the European Banking Authority. "Maybe we can extend our collaboration," she says.
The Central Banking awards were written by Christopher Jeffery, Tristan Carlyle, Daniel Hinge, Arvid Ahlund, Dan Hardie and Rachael King.