This is not a Regulatory problem but a Technological one.
The vast majority of banks support their regulatory Capital calculations on legacy systems, disconnected in information Silos with very poor data quality.
As a consequence, the information extracted from these data is incorrect and leads supervisors to make erroneous decisions.
SAP Banking's Integrated Financial and Risk Architecture should have been the solution to this disaster, but 20 years after my first Bank Analyzer project, very few banks have faced true transformations of their Information Systems.
The situation is becoming critical with the capitalization tensions that affect the entire Financial System and that will increase as the scarcity of Capital increases.
The Financial System supports the largest debt in history, in absolute terms and as a percentage of GDP. This excess debt overconsumes Capital.
At the same time, the necessary energy transition is weakening growth and weak growth slows down the generation of Capital.
If Capital is overconsumed due to excess Debt and does not regenerate at the same rate due to weak Growth, Capital becomes scarce.
And Capital is the most important resource of the Financial System, so if it is scarce, the highest priority of the Financial System is Optimizing Capital.
But if banks cannot accurately measure their capitalization levels, how will they be able to Optimize Capital?
12 years ago I came to the same conclusion that you have just reached and since then I have led a team capable of developing the processes and technology necessary to Optimize Capital in the 70% of the World GDP managed with SAP.
We are looking for partners. Contact me with a linkedin Direct Message if you want to know more details.
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