BIRD and IReF: A paradigm shift in regulatory reporting

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The regulations of national, European and international supervisors are constantly changed and expanded: additional information is required, requirements change, and reporting structures have to be modified. The European System of Central Banks (ESCB) has a long-term objective to improve the consistency of data collection from banks in order to reduce the reporting burden on banks, increase the efficiency of reporting, and improve data quality.

The ESCB is currently developing two major SSM (Single Supervisory Mechanism)-wide initiatives

BIRD (Banks‘ Integrated Reporting Dictionary)

aims to create common definitions for regulatory reporting, describe the data to be extracted from banks‘ internal systems, specify the transformation rules to be applied so that banks can organize their internal data appropriately, and standardize banks‘ reporting procedures for national and European authorities. BIRD is a voluntary standard developed in collaboration with major European banks. It provides an efficient new data model including transformation rules that banks can apply to properly structure their data for regulatory reporting.

IReF (Integrated Reporting Framework)

This is intended to create an integrated reporting system for banks that could be applied throughout the Euro area. This would simplify reporting procedures by requiring data to be collected only once via an integrated scheme, which European authorities could then use to prepare specific analyses and reports and reduce the number of ad hoc data requests. The IReF will be mandatory and will define future regulatory reporting requirements by merging almost all the current reporting templates (such as AnaCredit, BSI, MIR or SHS) into a single consistent and consolidated framework. It will apply the principle of proportionality, especially with respect to granularity and the data reporting cycle.

Together, the two pillars of BIRD and IReF underpin the long-term ESCB strategy for faster and more standardized reporting for banks.

Although BIRD will be voluntary, it will contribute to the harmonization of regulatory reporting through the standardization of input data. Therefore, it will make sense for most institutions to implement both BIRD and IReF together, especially for internationally active banks. Neglecting BIRD and implementing IReF reporting requirements exclusively through software vendors – with their proprietary data models – will be an option especially for small institutions.

The adoption of BIRD can help banks to address several challenges they are facing related to regulatory reporting

Exemplary high-level architecture to implement BIRD

How could a potential architecture to implement BIRD look like? The following graph shows the high-level architecture and the explanation of the key building blocks.

Options for implementation of BIRD

When it comes to the adoption of BIRD there are different aspects which needs to be considered. 

Depending on the bank’s system landscape and data architecture there are different options how BIRD can be implemented. Modern technologies and architecture patterns like Data Mesh, Data Fabric or Data Virtualization can be leveraged in addition to established approaches like Data lakes.

Scenarios for BIRD integration in your bank

We distinguish between different scenarios for the integration of BIRD into your bank architecture depending on the current landscape and utilizing modern technologies, architecture patterns, automation and assets like ou Cognitive Classifier for automated mapping.

Consolidation of existing DWHs/Data lakes

Existing DWHs are replaced and transferred to a new data platform. The resulting new data platform includes the BIRD requirements and has an integrated data store.

Development of a primary BIRD data platform

Implementation of a separate BIRD data platform in which the bank’s data is prepared and mapped to the BIRD data model. The existing data warehouses will continue to exist.

Data fabric concept

In the future, the data fabric concept via data virtualization will ensure that source data remains, and queries are delegated to the source systems. Sorting, aggregation and linking operations will be moved to the source databases before the rows are returned.

IBM’s BIRD Readiness Assessment to get ready for reaping the benefits from BIRD

We have developed a BIRD readiness assessment to help you get ready to adopt BIRD and reap its benefits. We analyze your current as-is situation and develop together with you your future financial and risk architecture. We design a concept that is tailored to your bank’s individual needs and integrate the BIRD data model. We recommend which technical implementation scenario will be used and best fits your current data architecture and system landscape based on prepared decision criteria. We determine the requirements and the current state of development of the technical architecture of the regulatory reporting solution. We develop possible architecture scenarios under using the guidelines of the strategic orientation. Subsequently, we evaluate the architecture scenarios and make a recommendation which fits best for you. As part of the evaluation an initial BIRD prototype can be implemented leveraging our IBM framework for a BIRD prototype and pre-build IBM assets which can be adapted to your specific architecture. The creation of an implementation plan to achieve the target would rounds off the project.

There are three main aspects to consider for a bank when it comes to BIRD adoption:

1. Estimation of adoption transition costs of BIRD

The transition costs will vary greatly from institution to institution, as they depend on various factors, such as the size of the institution, the number of group companies or the accounting standards. Furthermore, the existing local system landscape and architecture needs to be considered. Is a standard reporting software or central data platform used? Parts of these investment costs would already be due with the IReF implementation.

The transition period must be the same for all institutions. This also defines the length of the necessary parallel operation to migrate the existing reporting system to the new one.

2. Evaluation of resulting effects on current operating costs after introduction of BIRD

 The institute will have to reorganize its ongoing operating costs after the transition. Diverse reliefs, such as easier interpretability, improved interaction, or reduction of ad hoc queries can be realized

3. Result of the potential of additional benefits through the introduction of BIRD

Through the adoption of BIRD added value or additional relief could be realized. For example, implementation of Data and Analytics use cases leveraging the data, the introduction of uniform, consistent central master data and reference data for corporates and securities or data sharing

There is currently an ideal opportunity to realign the reporting system on a sustainable digital foundation. To achieve this, many prerequisites must be created at the European level and all stakeholders must be united behind the common vision.


Marinela Bilic-Nosic

Executive Partner Banking and Financial Market

Karen Mindermann

Associate Partner Data Services

Umesh Nimbalkar

Associate Partner Banking and Financial Market

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