Vendor Added Value

Vendor Added Value Benefits

Vendor Added Value – “VAV”, let’s call it, is all the comforting layers of extra value client firms get from experienced vendors. Indeed, here I am talking about “VERMEG VAV”. Global regulators, clamping down with attention-grabbing Senior Management letters and significant mis-reporting fines have an ever-slimming tolerance for dodgy data, broken processes and reporting interpretation errors, and an ever-burgeoning interest in operational resilience. So, do you realise just how much Vendor Added Value “VAV” helps everyone, regulated firms and regulators? As 2019 closes, and 2020 cranks up, firms need the confidence and safety of being able to partner with a top-draw provider, and here I look at the “VAV” that VERMEG brings.

VAV: interpretation issues, regulator’s errors and omissions

In 2019, VERMEG’s many regulatory Subject Matter Experts have, like every year before, dived into regulatory reporting consultation papers and final rules, and encountered many examples of validations that don’t work, vague definitions, inconsistencies in rounding and summation, units of reporting and many other challenges. Indeed, to have automated some reporting instructions literally would mean that the resulting solution may not work as the regulator intended, or at all! Time and again, issues we find are of value to the whole industry, not just VERMEG’s clients: regulators everywhere in Europe, Asia and the Americas all experience the same issues - regulators are not reporting institutions, they don’t have firm-side test data, and they have a difficult job in issuing watertight complex reporting instructions. As a “VAV”, we find that it is only the iterations that iron everything out.

Indeed, here is a sample of instances just from 2019:

  • Wrongly documented country and currency codes - VERMEG reported these to the continental European regulator involved – all fixed in the final rules
  • Reporting in units vs thousands – where European XBRL filing rules trump local rules, VERMEG helped get this correct, where other vendors had got this wrong
  • A major regulatory reporting overhaul in Asia Pacific – VERMEG SMEs found over 15 inconsistencies during consultation, and still found validation and formatting errors in the final rules
  • Interpretation – of course, some regulations are principles-based and are therefore intentionally open to interpretation. There is however a difference between this being deliberate, and cases where the rules are just inadequately framed. Our SMEs have had to work out what is really being requested by the regulator.

Value Added Vendor – VERMEG’s perspective

So, good vendors are not just selling you inanimate, clinically functional software; the solution is more of a living thing, it evolves continuously as it is maintained by VAV experts as the reporting requirements evolve. “VAV” is about a relationship between the vendor and the regulated markets their SMEs know, it is about the nuances. In our case it is the many hundreds of SME years, collectively, of expert knowledge lasered-in on getting the regulatory reporting product continuously right. This means our clients benefit, perhaps unknowingly, from VAV where these really quite common circumstances arise:

  •  Spotting illogical or incorrect definitions, and getting these corrected
  • Inconsistent instructions that would not work in practice, and liaising with regulators to get these sorted out
  • Finding contradictory information about formats, start dates, or scopes of application It follows that the solution from a VAV perspective is over and above that of the software alone. Of course, this also includes the decades upon decades of Professional Services experience which is additive to the solution provided, especially where the realities of client data have to be dealt with. VERMEG is a VAV not just for our regulatory SME content, but from the Professional Services input associated with every installation and every ongoing client relationship.

VAV automation can be more accurate than the rule book

A “VAV” solution is often more accurate than the regulatory reporting instructions themselves! VERMEG has to add value to some of the ambiguous definitions we see from time to time, meaning that our computation and reporting products have to codify what the regulator meant, even if it was not spelt out in the reporting instructions. How about that for Vendor Added Value! VAV is especially relevant where we are dealing with a Closed regulator (a ‘Closed’ regulator is one that does not treat software vendors as stakeholders and will only liaise with reporting institutions; there is no constructive dialogue about reporting goofs except via the client, as we cannot easily deal directly with the regulator). In these circumstances, VERMEG as the vendor facilitates the interpretation effort, using our own and our collective clients’ input. That’s another layer of VAV which VERMEG brings.

VAV means being aligned to the future

Not all vendors are the same, to state the obvious. Having years of SME experience, easily accessible peer mentor review, and decades of seasoned senior experience on tap is worth more than money, it is about comfort. Furthermore, a Value Added Vendor should be already aligned to the future: as regulatory reporting goes more granular and moves towards being machine readable, it is best to have a “VAV” on your team, one that is aware of the direction of travel, and engaged with regulators internationally as these changes crystallise. Less experienced providers leave a firm exposed.

VAV deals with incoming change

In addition to the attention to detail from our SMEs, we keep close watch on the horizons. In 2020, we can expect rolling changes to EBA Data Point Model; the early days of Basel IV - especially FRTB; planning for post-Brexit changes; Gabriel and other gateway changes; Investment Firm reporting regime progress in Europe; the impact of virtual licences in Asia and of new transmission gateways and more granular regimes everywhere; in North America we already see the emergence of the collaborative techsprint model and this will further accelerate the deepening dive into digital regulatory reporting and digital rule books. Being with a Value Added Vendor keeps clients informed; it even adds comfort, as I have mentioned.

Happy 2020

VERMEG thanks its hundreds and hundreds of international regulatory reporting clients for their ongoing loyalty and look forward to being able to provide VAV-powered service in 2020. Happy New Year!


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