Danish banking leader, Danske Bank, looked to Invoke for a robust, agile and automated solution to its capital requirements reporting obligations. Michael Bardram, Senior IT Consultant explains how the new system was put in place and the multiple ways in which it has benefited the Group.
To meet the requirements of the EU’s CRD IV Package, the majority of Europe’s 8,300 credit institutions and investment firms need to equip themselves with XBRL-enabled reporting technology. An XML-based format for standardizing data, XBRL increases the speed of handling large volumes of financial and regulatory information in multiple languages, helps minimize errors and enables automatic checks. Switching to an XBRL reporting system may require significant effort in the short-term, but the result for firms is not just regulatory compliance as XBRL can also be used to improve internal control and governance.
A pro-active approach to support an uninterrupted process
Danske Bank took an atypical approach to migrating to XBRL, compared with industry peers: it first introduced a standard software application to comply with the CRD III Directive as a sand-box exercise, before leveraging the solution to support compliance with CRD IV reporting.
“We used CRD III as a dry run as we didn’t want to implement two changes at once – moving from CRD III to CRD IV, and from the old system to the new system. Our aim was to simplify testing and guarantee continuity”, explains Bardram.
As such, Danske Bank began its transition early: it began investigating XBRL solutions in Q2 2011, and Invoke was selected from a shortlist of solution providers in the autumn of the same year.
“A big attraction of Invoke was that it offered a complete solution with significant flexibility. Some vendors offered an XBRL engine, but we had to do the rest ourselves; others offered packaged software, but we still had to do all the mapping; from our point of view, Invoke was the vendor offering the most complete, off-the-shelf solution that we could plug into our existing IT systems.”
Danske Bank chose Invoke FAS Regulatory, an automated platform for regulatory and internal reporting and Invoke e-Regulatory, a collaborative web portal solution for steering the latter stages of the disclosure management process.
Flexibility and agility: critical factors
A major focus for Danske Bank was the maintenance associated with reporting templates:
“Previously, each time a template changed, we had to change everything ourselves, manually. There are 62 templates used in Danish reporting: this meant, for example, that if template number 57 changed, we had to update five templates! With the Invoke system, if the content of a template is changed, the system takes care of updating the others. It’s a huge win for us in terms of time spent on data management”.
A reactive and committed team
The project launched in November 2011. By the end of the year, it became evident that the volume of data generated by Danske Bank was higher than had originally been anticipated – around a million rows.
“I was very impressed. A lot of vendors give up when they hit a hurdle, but Invoke explained the issue clearly and promised to deliver a sustainable solution within four months that respected the functional requirements of maintaining a fully comprehensive audit trail with granular data lineage. I had full confidence in the team, who did come back with a solution, and within the agreed timetable.”
Danske Bank also appreciated the ability of the Invoke team to simplify the project for the client. This was important, because the project required significant internal resources:
“The project was cross-border, involving not just Denmark, but also the UK, Finland and Luxembourg. This complicated the set-up and testing but the delivery team at Invoke was unfazed by the complexity of the project scope, and this reassured the internal team at Danske Bank”.
“Being able to rely on solid external XBRL and regulatory reporting domain experts allowed us to concentrate on our data. One of the major issues in this type of project is the data stream: what data you already have, and how much effort you have to put in to fill the gaps. We consulted widely within the bank, and the result was that we knew what data we would put in our repository and how we would structure it. It wasn’t difficult from that point to interface with the Invoke platform”.
Customized reporting and improved internal control: important secondary benefits
Customized reporting was a key requirement alongside regulatory template flexibility:
“In the previous system, integrating credit risk data into the solvency system could take more than 24 hours. If someone changed the content of a template, it was horrendous to update. These issues have been resolved using the Invoke solution”.
Once the system is in full production – it is currently being used by the project team pending full roll-out for COREP under CRD IV – Bardram hopes to see how far analysis currently being done in other systems can be carried out using the Invoke system. Danske Bank also plans to go beyond regulatory compliance, using the system to support daily controls, to spot trends and inter-period/entity variations as well as to track errors.
A successful implementation ahead of schedule
Danske Bank is pleased with the result of the project to date, and is confident that the Invoke solution will continue to meet requirements going forward.
“The project has been a success so far. I believe that at Danske Bank we are ahead of the rest of the industry in meeting our XBRL reporting obligations, and we are comfortable that Invoke is the ‘safe pair of hands’ that will help keep our CRD IV regulatory and internal reporting on track”, concludes Michael Bardram.