Starting September 2021, the Australian Prudential Regulatory Authority (APRA) will begin progressive transition of its data collection to their new platform APRA Connect. APRA Connect is a strategic investment by APRA aimed at providing further flexibility and efficiency to both the regulator as well as the regulated industry. APRA Connect will also be a key enabler for the regulator to collect increased granular data from the industry in the future.
APRA Connect will replace the current desktop-based platform Direct to APRA (D2A). D2A has been around for multiple decades now and is deeply embedded in the overall regulatory reporting process playing a crucial role in data quality monitoring, enforcement, and reporting submissions. This is a major change to all industries regulated by APRA that use D2A for reporting submissions. D2A will be phased out over an extended period of time; and entities must prepare their systems and processes to submit their data to APRA on both APRA Connect and D2A. Most recently, APRA introduced further changes to D2A (version 6); highlighting the significant dependency the regulator will continue to have on D2A in their regulatory processes.
APRA Connect is a web-based platform that is being implemented by an international vendor. The project has been running since 2018 with a disruption due to the pandemic that led to the project being put on hold for 6 months. APRA has now confirmed the go live date as September 2021. A test environment is also planned to be made available in June 2021.
In this article we look at some of the considerations for entities in addressing this major change from APRA.
Manual vs. Automated submission
Many entities submit data manually on D2A today by copy-pasting data into the platform. APRA Connect will make manual entry significantly more cumbersome, as it supports entry of only one data point at a time. For entities submitting data manually currently, early assessment of this impact is highly recommended to determine the feasibility of continuing manual submissions on APRA Connect.
Automation of regulatory reporting submissions will lead to greater efficiency and will minimise risks for entities submitting data manually. However, the degree of automation is something entities must consider while considering timely readiness for APRA Connect.
Below is an example of a typical regulatory reporting process flow highlighting the automation areas.
There are several vendors offering solutions that aim to automate the entire flow. Entities can derive significant benefits from automation, including increased data quality, operational efficiencies and improved governance and controls.
However, implementing end-to-end automation can also be time-consuming and sometimes cost-prohibitive and may not be fit-for-purpose for every organisation (depending on size and complexity).
Every organisation requires an external solution for their submissions in APRA Connect and D2A.
It is important for entities to carefully consider all the automation solution options available and the degree of automation considering the timeline for APRA Connect go-live and specific needs of their organisation. Not every organisation will automate the end-to-end process; but every organisation requires an external solution for their submissions in APRA Connect and D2A.
Co-existence of D2A
APRA Connect will be progressively rolled out across all industries. Whilst all entities must maintain their entity information on APRA Connect from DAY 1, it is still unclear when APRA intends to transition its existing forms over to APRA Connect . Although APRA has made clear of its intent to retire D2A at some point in the future, D2A likely to co-exist along side APRA Connect for many more years to come.
Entities must consider this situation in their overall impact assessment and solution identification exercise. Some areas of consideration in this regard are:
Process and tools adjustment to easily identify all APRA reporting obligations across both platforms for every reporting period
Process re-engineering to reduce duplication of effort due to multiple submission platforms e.g. pre-validation of data, review and approval, reconciliations
Reconciliation of submissions across both platforms
Infrastructure setup for seamless submission on both D2A (desktop-based platform) and APRA Connect (web-based platform) for a given user
Nature of reporting on APRA Connect
APRA Connect will initially be used for collection of data for the newly introduced reporting standards such as Private Health Insurance (PHI) reform (HRS 605.0), Superannuation data transformation collections, and ARS-220 Credit Quality. The common pattern across these new reforms is APRA’s intent to collect more granular data. Collection of granular data is largely a positive move from the regulator that will eventually ease the burden on regulated entities but also provide the regulator with greater flexibility to interrogate industry data for policy supervision.
Below is an example of APRA shifting away from form based data collections to granular data set based data collections. Proposed ARS-220 Credit Quality applies to Banking industry and the new reporting standards are set to be implemented via APRA Connect.
Granular data collection from the industry is another significant change APRA is introducing in parallel to rolling out a new data collection platform. Changes such as Superannuation data transformation or ARS-220 credit quality in themselves are significant and will require a lot of effort from entities to prepare and address this regulatory requirement.
Entities must consider the nature of data being reported on APRA Connect on go-live in their overall assessment of this change. Moving away from form-based collections will result in changes on how data is prepared, validated and reconciled with other submissions and the ledger/source of truth. Entities must also consider the technology requirements for such a change. Submission of vast amount of granular data will introduce its own complexities such as system performance, scalability etc.
RegConnect will get you APRA Connect ready while realising automation benefits for D2A submissions today.
In conclusion, APRA Connect implementation must not be taken lightly by entities big or small. This is not just a technology replacement program by APRA. This will introduce a fundamental shift in how entities prepare and submit their returns to APRA. We highly recommend entities take a holistic and strategic approach while defining their future state of regulatory reporting by considering both the entire series of changes planned by APRA, but also tapping into the latest advances in technologies to create a more flexible, agile, and scalable solution.
This is no easy exercise and will take time to do it right. RegConnect can prepare your organisation for this upcoming change from APRA in a timely manner with minimal impact to your existing process. Built on latest technologies and standards such as micro-services architecture, RegConnect has been carefully designed to be flexible and agile to address any regulatory change that will be introduced by the regulator in the future (e.g. more granular data collection, APIs for submission etc.).