The PA is on a journey to become a best-in-class prudential regulator. Through the transformation programme, the PA seeks to modernise its supervisory approaches through several initiatives including upgrading its IT systems and infrastructure. Central to this journey is the empowerment of our staff with the best tools available globally to enable them to fulfil their functions and enhance the quality of supervision. 

The Financial Sector Regulation Act (FSRA) gave effect to the establishment of the Prudential Authority and Financial Sector Conduct Authority (FSCA) which became effective on 1 April 2018.

The FSRA effectively merged supervisory responsibilities, personnel, processes, systems, and cultures of the following entities into the PA:

  • Bank Supervision Department (BSD) within SARB
  • Insurance Supervision Department which was within the former Financial Services Board (FSB)
  • Cooperative Financial Institution (CFI) supervision section of the Cooperative Bank Development Agency (CBDA) at National Treasury

As with any mergers, the need to create a new way of working that would enable the PA to deliver on its mandate was identified.  

The Prudential Authority of the future is one that uses advanced analytics capability to deliver relevant insights from a variety of data sources, with processes and systems that allow for more efficient co-ordination and collaboration on supervision and oversight. 

The multi-year transformation journey commenced with the development and approval of a new target operating model (TOM).

Key projects identified to enable the TOM and assist the PA to meet its transformation objectives include the following:

  • Industry data taxonomy (IDT)
  • Integrated long-term solution (Umoja Solution)

To successfully deliver on the transformation objectives, The PA will engage with industry bodies and associations on an on-going basis, in an effort to minimise the impact on key stakeholders. 

“The transformation programme is an incredibly important project for the PA and the institutions we supervise. Once implemented, it will assist us to achieve our strategic objectives by enabling the adoption of consistent regulatory strategies, collaboration and coordinated actions with other industry bodies as well as to reduce the cost of supervision in the long run” – Kuben Naidoo, SARB Deputy Governor and PA CEO.

One of the design principles adopted as part of the TOM design was the PA becoming an information led organisation. To achieve this requires the ability to effectively gather and share information regarding the business models of financial market participants.

The industry data taxonomy project will define standard terminology and data classifications for all regulatory returns submitted by the institutions the PA regulates.

The project aims to meet the following objectives:

  • Enable the sharing of information among regulators to reduce the burden of regulation on institutions
  • Define both the quantitative and qualitative data taxonomies for all Institutions the PA regulates.
  • Ensure that the terms and definitions used for reporting are consistently understood and applied by supervised institutions and supervisors (SARB & FSCA).

Once defined and implemented, the taxonomy will provide a base for advanced analytics capabilities within PA and feed into the Umoja Solution. 

The Industry Data Taxonomy Project will define standard terminology and data classifications for all regulatory returns submitted by the institutions the Prudential Authority (PA) regulates, to meet the following objectives:

  • sharing information among regulators to reduce the burden of regulation on institutions;
  • a definition of both the quantitative and qualitative data taxonomies for all institutions the PA regulates; and
  • terms and definitions used for reporting consistently understood and applied terminology by supervised institutions and supervisors (South African Reserve Bank and Financial Sector Conduct Authority).

The modelling process for banking has been successfully concluded. The result of this process is a structured description of the model in form of:

A data point methodology (DPM) dictionary

Listing and naming all concepts with their definitions identified in the process of analysing the legal Acts

Presenting definition breakdowns in taxonomical view for enhanced understanding of those concepts

Annotated templates

Containing tabular views of requested data with annotations of meta-data artefacts stemming from the DPM dictionary

All industry stakeholders will have an opportunity to participate in a data model showcase where a demonstration of the new dictionary (taxonomy) which contains terms, definitions and validation/business rules will shared.

The taxonomies defined as part of the Industry Data Taxonomy Project will be used to configure the regulatory returns that will be processed by the Umoja Solution.

The Umoja solution advances the work completed by the Institute Information Management System (IIMS). IIMS was implemented as an interim solution which provided a platform that allowed the PA to move closer to an integrated solution for all institutions.

Umoja Solution not only replaces some of the existing legacy systems but introduces new technology with the following benefits:

  • A portal as a new channel of interaction between the supervised institutions and the PA.
  • Quality, reliable data that is available when needed and can be easily shared with PA stakeholders.
  • Supervised institutions will be able to see the progress on their applications.
  • A more holistic view of institution profiles.
  • Automation of certain analysis conducted by supervisory teams.
  • Market research analysis.

PA Transformation Programme:  Umoja Solution

The Umoja Solution not only replaces some of the existing legacy systems but introduces new functions, enabling more efficient supervisory activities. A key change will be the introduction of a portal as a new channel of interaction between the supervised institutions and the PA.

The portal will be implemented in the following phased approach.

 

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It is expected that the portal will have the following impact on the industry:

•       The move from email interactions for applications, notifications and the submission of regulatory returns.

•       The portal will also serve as a way for supervisors to interact with institutions (e.g. letters and formal responses will be issued via the portal).

•       Once the portal is implemented, supporting documents can be submitted in multiple formats, including MS Excel and direct capture.

•       XML, MS Excel and direct capture options will be available for supervised institutions’ submission of regulatory returns.

What to expect when the portal goes live in 2022

  1. Submission of applications by supervised institutions to use the portal.
  2. Access the portal on a secure public domain to support the following:

a.    submission of profile information, notifications and applications;

b.    application for new licenses; and

c.     management of supervised institution profile information.

Industry participants are encouraged look out for communication from the PA to understand and plan for the changes that will be brought about by the new way of work and how they will be impacted.

The industry engagement roadmap below outlines planned key interactions between the PA and industry over the next 6- 12months.

 

Feel free to contact us on PA-Transformation@resbank.co.za  for more information on the PA Transformation Programme.