Webinar – APRA’s Direction for data collections transcript

0:01

Hi, everyone. Thanks to Logging all for today's webinar, focused on APRA’s Direction for data collections. We’re just waiting for a few more people to login, and we'll get started in another two minutes. Thank you.

2:02

Good afternoon, everyone. Thanks for logging on for today's webinar, focused on APRA’s Directions for data collections. My name's Ben McLean, I’m APRA’s External Communications Manager, and I'll be your moderator for today's webinar. In this webinar, APRA’s Deputy Chair Helen Rowell will provide insights into APRA’s Roadmap to transform the collection of financial industry data. Alison Bliss, the General Manager of Data Analytics and Insights, will present a case study to highlight the importance of industry involvement in design and implementation, and next steps in the consultation process.

2:36

The webinar will set the scene for future industry roundtables and help entities to prepare to engage on key issues.

2:44

After an introduction from Helen, today's webinar will cover where we're headed and what unites us, before moving on to cover specific industry roadmaps.

2:54

Before Alison gives us some examples of engagement in action, and we conclude by looking ahead to next steps, including how we'll engage on our direction for data collections.

3:05

Before we start some brief housekeeping. All microphones are automatically muted, other than for the presenters, and we're not using the raise hand function in this session. If you wish to ask a question, please click on the Ask Question function towards the bottom of the webinar control panel you can see on your screen. Type your question, and we will answer it at the end of the presentation.

3:28

Now, please note that this session is not designed to get into the weeds. So if you have a really technical and specific question about a definition or reporting standard and for having done a lot of data webinars over the years, I'm pretty sure that a lot of you will have those kinds of questions. Those are not the type of questions, we're answering this session today.  more high level than that. We anticipate the webinar will go for about 45 minutes and with that, we're ready to get started, so I'll pass over to Helen Rowell to lead us off. Thanks Helen.

3:59

Thanks, Ben, and welcome, everyone, Thank you very much for joining us today. I'd like to begin by acknowledging the traditional custodians of the land on which we meet today. I am on the land of the Gadigal people of the Eora nation, and I pay my respects to their elders, both past and present. And I also extend that respect to other Aboriginal and Torres Strait Islander people who are present today.

4:22

Our work to enhance our data collection and analysis capability is a really key strategic priority for APRA. As you would all know, our role is to maintain the safety and soundness of the financial system and financial institutions, so that their commitments to consumers will be met.

4:39

And to enable that APRA collects data to support supervision activities. And that includes confirming that regulated institutions are meeting prudential requirements and identifying and managing emerging risks. But APRA also collects data on behalf of other agencies to assist them in fulfilling their mandates and to publish and provide transparency for industry and other stakeholders.

5:01

APRA has collected data in a similar fashion for many years. It's often high level aggregated data and it has limited ability to answer future questions and issues that might arise. And so to better support our data driven decision making by us, and also by external stakeholders. And, more importantly, it's just a step towards better regulation. APRA is is continuing to invest in and embed data as a core enabler, for achieving its purpose and strategy.

5:32

Sorry, slight pause.

5:36

So, the Bank of England has said, publicly, and I'm sure many of you on this call today, would agree that data is really the combustion engine and at the heart of the modern economy.

5:47

Technology and data together are really key to enabling effective operations and decision making for the entities that supervises. It's also critical for APRA and our peer regulatory agencies. So our corporate plan has noted that we would accelerate the migration of continuing data collections from D2A to APRA Connect for all regulated industries, and that we would implement new data collections designed to collect more granular data to better enable data driven decision making. And this trend towards enhance data collection is widespread. With financial sector regulators around the world, greatly expanding the depth and breadth of the data that they collect.

6:27

So what's our objective, or our destination as we head down this path?

6:32

Well, I'll said it in my opening, really, our data collection is, at the moment focused very much on answering today's set of questions, and where we want to get to is having better ability to be able to answer, tomorrow’s unknown questions.

6:48

We seek to be risk based and outcomes focused in our approach, to fulfilling our mandate. And data is a key enabler of that, and with these richer, more flexible data collections, we can be less process focused, and more targeted in our supervision activities, and also access the data evidenced base to support policy development.

7:07

So, we want to be able to collect deeper, broader datasets that can be used in many different ways, not only to answer today's questions, but those that might emerge in future.

7:20

Secondly, we want to continue and improve our data sharing. So we want to strengthen our partnerships with our peer agencies, because we have a core aim of this work that we collect once and share. So we get data, collect it and share it with other agencies so that we can reduce the burden on industry in providing that data to us.

7:43

And finally, it's important that we transition to a more efficient web-based data collection. And this will be enabled by the transition away from our current data collection system D2A. All new collections will be created in APRA Connect, and by 2027, so over the next five years, we want to transition all collections on onto APRA Connect and be in a position to decommission D2A

8:07

And in conjunction with this uplift in data collection, we're also working to improve our analytical capabilities, both for the people and the technology that we use, so that we can make the most of debt of this data for our own purposes. But more importantly, for all of the other users of our data as well.

8:26

I'll share just some examples now of how we use data analytics, which hopefully are familiar to all of you. So, firstly, Superannuation heat maps, and the performance test information that we've been releasing for the last couple of years. They really illustrate the power of better data for APRA decisions and supervisory action, but also in providing increased insights for all stakeholders.

8:48

And we, of course, use the data across all of our APRA regulated industries in this way, with a view to providing more transparency and better insights on key industry trends and issues.

8:58

And the ADI deferrals is another example of where we used data collected by APRA to strengthen our understanding of emerging risks in entities during COVID and to really provide some external visibility on an of the moment issue.

9:20

So really, this work. What we really want to emphasize for you today is that our common interests are really broadly aligned, and also aligned with the interests of other key stakeholders, including government. And that includes, for example, firstly, stability of the financial system. A prerequisite prerequisite for economic activity and prosperity is that Australians have confidence in the safety and stability of the financial system, and that's in our interests in your interests.

9:49

And so APRA data helps this sort of use of the data read as supervision activities, the publication of the data and the sharing of the data with other agencies like the RBA and ASIC.

10:01

Secondly, it's about minimizing burden on industry. At present institutions, are required to provide the same or similar data to multiple agencies. And so, there's considerable scope to streamline this process for you, and reduce the number of channels and times that you have to submit data. And we also want to get to a way of honing into agreed definitions for the data points submitted, and used by the different regulatory agencies that will also minimize burden.

10:30

Having more detailed data sets, will mean that we can aggregate the data in numerous different ways, without having to ask you to provide different cuts or aggregates of data.

APRA Connect will also support faster, more secure submissions, and so should make submissions less prone to human error.

10:48

The third aligned objective is around, supporting our risk-based supervision and allowing us to be more targeted. We do try and be risk based and outcomes focused in the way we fulfill our mandate. And, as I've said, data is a key enabler of that, and so with richer and more flexible data collections, we can better target our efforts where it's needed, and leave others to get on with the job of running their business and meeting the needs of their customers.

11:13

And then, finally, there is a cost of continuing D2A for APRA and for the industry. D2A was created in 2001, and nearing end of life. And the cost of its continued use of out dated technology is increasing for us and for industry, because of security updates, fixes and feature updates as they become available, and core components of the platform lose support.

11:35

So for regulated industries, that means you have to have specialized legacy environments that are expensive to maintain and pose cyber risk.

11:44

So, progressing this important initiative is a really significant priority for APRA as it will have important benefits for us, but also for our key stakeholders, government, other regulatory agencies, and all of you, the entities, which we regulate and wider stakeholders that are the Australian community.

12:02

We acknowledge that there will be some near term cost and effort required to make this transition. And the journey may not be easy, but the medium to long-term value, in terms of reduced burden and improved insights are expected to be significant.

12:15

We genuinely want to partner with you on this journey, And Allison is now going to outline how we when we engage with you to enable it. Thank you.

12:26

Thank you, Helen and am very keen to share with you our thoughts around engagement and obviously engaging with all the stakeholders who have an interest in our data collections directions and our journey here it’s going to be critical to the success of our activities and our outcomes in terms of driving data enabled decision making within APRA and providing transparency to industry. So our direction that we've outlined so far does take account of each industry and is tailored to reflect the work that's already underway on new data collections. But also considers the expected regulatory policy agenda, and, importantly, industries capacity to successfully manage all the change that's involved in this work in this outcome.

13:20

So if we think about big picture, we've got a number of industry specific and cross industry collection roadmaps that we've outlined. But from a kind of a holistic perspective, activities as outlined for the first two years are already established and largely well understood by all stakeholders. But the collections that we're planning for 2024 onwards is still under development. And hence, we have an opportunity to work with you to understand where pressure points and where we can achieve success and progressing data program. 

And our engagement more broadly, we intend to do a number of things which we feel it critical, we want to design with outcomes in mind. We also want to engage early and closely with stakeholders on collection design and implementation. So we see it as a partnership and a partnership that will persist through until collections are in place. We want to take the time, the appropriate time, to get collections right, and to iterate them as needed.

14:33

We also recognize that we want to tailor our approach by industry so that we can take account of the regulatory agenda occurring across the industry, change capacity that might already be sucked up elsewhere. But also the data maturity of each of the industries that we regulate isn't equivalent and there are some differences that we want to acknowledge and bring into play. But also very conscious of regulatory burden, and we intend to remain in that space through the duration of the program. But ultimately, we also want to get to a place where we're delivering rich insights and end users, and as Helen outlined, that's not just ourselves, but it's other peer agencies and regulators, government, academics, the general public, and stakeholders in general.

15:25

Just to touch on the industries that are noted, so for super whilst we really welcome feedback from the super industry on the directions set out in the paper, we intend to engage in this space through the super data transformation program, which is well and truly underway. We're in phase two, and we've actually been holding some roundtables on the next phase of SDT, just in the last week.

For insurance, the current activities are largely influenced by AASB and the PHI capital reforms.

16:03

And that, that will be one of the key drivers. But as the second element, we're looking to develop some larger collections, but in line with collecting once and sharing, we're intending to do that alongside ASIC.

And for banking, where sort of paced to facilitate a smooth transition. One of the examples of how we're looking at transitioning, instead of ramping up to more granular collections, is the Basel 3b credit changes where we implemented, or we have a simplified interim collection approach that sort of starts with the building blocks but will be built out over the longer term. And the design and implementation of the comprehensive banking data collections will be phased to manage the pace of change of industry and to recognize the work that has already gone into collections such as EFS.

16:58

Then we look, when we look at a cross industry basis, at the moment, there are currently not a lot of formal data collections, in fact, none in place, to monitor and evaluate cross industry risks.

17:09

And so we do intend to implement in that space. And I know we've called out remuneration and non financial risk and climate change amongst others as topics.

17:20

And one of the things that we intend to do is to likely vary the implementation by industry and potentially by topics so we will be somewhat agile. But we do intend to engage and consult regulated industries on common data items at the same time.

17:39

So if we move on to look at engagement in action. So as I mentioned before, our super data transformation program has been in train for quite a while, I think, we’re, essentially in year three, however, phase one has successfully completed. And I'm just going to share with you some of our approach to engagement in this program as a means to provide an insight into how we intend to engage across the other industries, and obviously, to continue to engage in super.

18:15

So webinars have become a pretty critical element of our engagement. And we've covered a range of topics, including on submissions of data and historical submissions of data. There’s the round table concept, which we have really benefited from in our feedback from industry has been really strong and has allowed discussion with industry on the proposals that are put forward. Or whether it's in their data directions paper that we have recently released, or as we go through and implement individual collections during the consultation phase. We found that the roundtables to be an incredibly important, those roundtables have actually allowed us to make adjustments as we've gone through, and to really, to really hone in on getting to the right outcomes from the data collection design perspective.

19:15

Roundtables who've been supported by working groups to discuss and respond to feedback from questions that were arising or have been arising from draft reporting standards. The nature of the working groups, being timely and relatively informal, helped to provide really good feedback on the proposals. And, if we were hitting a particular topic that needed, that, we all acknowledged it across APRA any industry needed, some greater focus, we've established focus groups to work through those particular topics and to help land on agreed positions.

19:52

Another critical element, particularly when moving into granular and detailed data, is pilot data. So, for SDT we took in over 300 submissions of pilot data in phase one. This was incredibly valuable for us in assessing whether the data would meet objectives, and certainly highlighted practical issues that entities experienced in reporting, and where additional guidance or improvements to definitions was required.

20:21

We then also supported informal entity meetings to work through with specific entities a range of issues that might be relevant and specific to either their data capabilities, or their ability to access underlying data, and to actually answer questions that were specific to their needs.

20:48

We also provided worked examples and FAQs, which have been a really effective way to ensure that we get a common understanding of the reporting requirements.

20:59

And, finally, in terms of working with other regulators, worked closely with other regulators, particularly ASIC on SDT, and a lot of that has happened both through the webinars, the roundtables, and the entity meetings, and also through bilateral engagement between APRA and ASIC.

21:21

SDT also, as you can see has is being delivered through three phases, and breaking it down into the three phases has allowed us to further break down into consultations for particular topic areas.

21:36

So our consultations on Phase one were released over three particular timeframes, and we intend to do similar Phase two. We also provide is provided a staged implementation of the reporting standards in phase one to help industry deal with the operational impact of implementing new standards.

21:58

And for further support for implementation, in terms of historical data, we further staggered the submission of historical data to allow for, to get focused on getting current data in, but also allowing some extra time, and some recognition of the capacity constraints of having everything do on a particular day or a particular timeframe.

22:25

And, lastly, APRA Connect, and the implementation of APRA Connect for super data transformation was a significant additional change for the super industry. And we provided significant engagement and support in parallel with the design of the collections to provide technical implementation support of APRA Connect.

22:48

We ran an intensive pilot and through that pilot, were able to understand the technical use of APRA Connect, but also, the support that has been required for entities, and the way that we could further communicate and enhance guidance material to ensure a smooth implementation.

23:08

Entities are also able to submit practice data in a test environment before going live, to build confidence, and an opportunity for entities to also understand the impact of their own processes.

23:23

So as you can see, the engagement for super data transformation was deep and broad. Based on where we have where we've gotten to with phase one with good, high quality data that has landed with us, and really positive feedback when engagement from the super industry we’re comfortable that that's a good roadmap for how we intend to continue this work within super and across the other industries, as well.

23:55

So the other stakeholders aligned with that collect once and share principle, that Helen outlined is really focused on cross government engagement.

24:07

So we established, actually, a number of years ago, a multi-agency data committee, the MADC to give us the unified strategic approach to data across agencies.

24:20

Our plans here align with the Australian Government's Whole of Economy, Vision for data. And all agencies intend through their support to us to maximize the value of data, increase re-use of data, and also increased sharing of data.

24:38

Investing in APRA Connect and using it as a primary data submission tool is allowing us to invest in infrastructure that can be re-used effectively.

24:52

And we'll also work across the other agencies with regards to sharing skills and analytics capabilities and the like. So the multi-agency data committee does promote this unified and strategic approach to data across the agencies. We do work together to identify and facilitate the implementation of the new data initiatives that inform policy priorities and close data gaps.  And as part of that, we know that APRA generally is the collecting agency, which is consistent with our powers under the financial sector collection of data.

We have already seen an increase of data sharing between the MADC agencies. And one of our key intentions is to reduce financial sector reporting burden through this increased collaboration and communication.

25:44

Multi-agency data community has supported and continues to support the implementation of our Data Directions initiative, and were part of the formulation of the paper that we put together and shared, and we continue to work across the agencies to identify opportunities to reduce overlaps, and to reduce duplicate reporting requirements.

26:12

So, if I just move on to how you can engage with us, so engaging with us in the short term sets us up, collectively for a long-term partnership in data.

We really feel that the richest engagement for each collection will include co-design  workshops, iteration of design of collections to learn and adjust, and the use of pilot collections.

26:40

There are many opportunities to consider, and we've outlined some of them in the case study. But just to reinforce, there will be periodic webinars and meetings to learn more about each new collection. There'll be the opportunity to practice in an APRA Connect test environment. There'll be industry reference groups on particular topics or collections. There will, of course, be formal consultation on reporting standards, and we will continue to use industry association working groups, where appropriate. So, all of those provide a great opportunity to engage.

In terms of key elements of which we're looking to get your future feedback on through both the roundtables and responses to the paper.

27:36

So, APRA will transition or data collections to APRA Connect over the next five years as Helen outlined. We note the importance of meeting the need for more detailed data, for prudential and other purposes. However, we welcome your view on the approach and alignment with your plans and with other stakeholder plans.

27:55

Collection Schedule for 2022 and 2023 are needed to fill near term gaps in prudential oversight but, stakeholders do have the opportunity via Formal consultation processes to suggest refinements.

28:09

Within the bounds of the five year timeframe, we do welcome suggestions on timing, sequence, scope and method of implementation for collections, particularly, those scheduled for 2024 and beyond. And, whenever possible, we’ll support innovative recommendations and take stakeholder needs into account.

28:28

We do acknowledge that the proposed timelines are ambitious, and that substantial effort from effort and entities will be required to achieve them.

So, we do welcome information from stakeholders on these costs, and we do commit to working to mitigate challenges as far as is practically possible.

28:46

We do commit to continuing to engage with stakeholders at a strategic and operational level. And, as I noted at the beginning, a little earlier, success depends on strong industry engagement and a real sense of co ownership of this process.

29:05

We welcome comments on experience today and recommendations on best ways to achieve our stated objectives, and we fully intend to continue to collaborate with our key agencies collective data requirements.

29:21

So, what's next?

29:24

The first step is to express interest in round tables.

Actually, so far, we have had an overwhelming interest in the Roundtable Discussions. We just wanted to flag that strategic in nature, and at this stage will not discuss in detail each data collection although we will have the opportunity to do that further into the process. We are seeking input from senior decision makers, but we do ask you to keep it to 2 to 3 people per organization.

29:54

Secondly, we ask you to come prepared, ready to talk impact and priority, and to illustrate benefits, you see, as well as the challenges that need to be managed.

And finally, we asked for you, as well as ourselves, to reflect for the long term, and for you to share with us what the direction means for your organizations.

30:16

So with that in mind, I think we have given a good overview of our intention and how we're looking to engage. So I'm going to pass the opportunity out there for questions.

30:31

Thanks very much, Alison. And also to Helen.

One of the questions that came in a few times for people, and some of you might have seen the answer that was posted was the question of whether or not the recording of this webinar will be made available. And I can answer that and say it is yes. A few hours after this webinar finishes that, everyone who has registered, including people who didn't actually attend, but did register, will receive an e-mail and that e-mail will have a link to a recording of this webinar. So, you can listen to it again, or you can share it with colleagues who might also want to listen to this webinar.

In terms of some of the other questions that have come in Alison and Helen, someone has asked, What agreements have been established with other government agencies, in relation to what information will be shared to achieve the objective of minimizing the data collection burden on the industry?

31:23

I'll take that one Helen if you’d like.

31:27

So, I think on each collection, obviously, we are looking to co design, and we have some formal arrangements in place that cover the relationships between the two agencies and allow data to share, to be shared. And we, but with the co design in mind, we anticipate that data will be available and the entities will understand where that data is being shared as it's being designed.

32:07

Yes, in a formal sense, Alison. It's covered in the MOUs that we have with each agency and also the terms of reference of the Multi Agency Data Committee, as well in terms of how we co-operate and share on this sort of initiative.

32:25

Now, just while I'm waiting for, our team of organisors to assist with some of the questions. Can I ask something else that's come in is the question of whether or not APRA will be engaging with the reg tech providers as part of this consultation?

32:42

Yeah. So, it's a great question, and yes, we will engage with reg techs. So we will have a roundtable and as we had with Super Data Transformation program, we intend to have reg tech engaged in the relevant conversations, webinars and roundtables as we go through.

33:04

Thanks, Alison, OK, so, more questions are coming through.  For the PHI industry, when do you expect Roundtable discussions to commence? for example, might it be before the end of this year.

33:15

So, I think we will undertake a number of roundtable discussions at an industry level over the course of the next couple of weeks. I think we're in the process of defining dates and sending out invites, and I think our roundtables will be largely completed before the end of the submission date for response to the paper. So, in the next four weeks, would be the best answer.

33:48

Great. Thank you, Alison. Will the granularity of data collected through APRA Connect by 2027 be at a finer grain than current submissions from banking?

34:01

Yes, we do. We are working towards granular collections. I think some of the existing collections are building up towards being more granular particularly in the credit space and we will be, you know, we will get to a point of data that is closer to the point where it is being produced within the entity.

34:36

Thanks, Alison.

34:38

In respect to insurance, is the national claims and policy data base likely to change to the new web based system as well, or is it limited to balance sheet financial statement information.

34:53

No, that is the intention is to move, you know, the NCPD I think is the common terminology that is used, our intention is to bring that across onto APRA Connect as well and we will likely look at the collection and review it at the time of transfer.

35:13

Thanks, Alison. Somebody else asks, Will APRA still be consulting on any reporting standards?

35:20

Absolutely. We have an obligation to consult on all prudential instruments and reporting standards are a prudential instrument so we will still go through our usual consultation process with industry around any changes to specific data collections that we proposed to implement. So there's sort of two levels of engagement with industry here. There's the engagement that we're going to have around the structure and technology used for the data collections and transitioning from D2A to APRA Connect. And then there is the separate consultation that will take place as we go through that iterative phased approach to updating and reviewing all of the industry based and other collections. So that ultimately, we ended up with a new and modern set of data on a new and modern platform.

36:08

Thank you very much, Helen, and just another question about what's coming up Alison. If someone has already registered for the Roundtable, do they need to do anything more now?

36:21

No, I think as long as you've registered and ready to go, we look forward to welcoming you to the conversation. Just a request though if there are more than three people in your organization, if you could work with your other organization members to try to bring it back to that three so that we can have good productive conversations. The larger groups, doesn't give people a lot of air time so we're trying to keep it tight time.

36:55

Running a tight ship, good to hear. Now someone else asked, Will other industries get the same support for new collections on APRA Connect as was given to the superannuation industry?

37:07

Yes, very much so. I mean, we've learned a lot through the data transformation process about what works and what and how best to engage and support industry through the implementation of pretty substantive changes to data collections. Now, the specifics of how we go about that with each industry might be somewhat different but absolutely, the commitment is to provide the support and engage with industry through every step of the process so that we have a successful implementation for each data collection across each industry.

37:40

Alright, fantastic, Helen. So, look on that note. I think we're going to wrap things up for now. So, thank you to everyone for your participation. A special thank you also to help Helen and Alison for making themselves available today.

An e-mail will be sent out shortly to everyone who registered regardless of whether or not they were able to attend including a link to a recording of today's webinar. If you have any further questions or comments, and I know we weren't able to get to every question today partly as I foreshadowed at the start, there were certain kinds of more detailed questions that we weren't intending to get into today. But if you do want to continue to ask, you can e-mail dataconsultations@apra.gov.au

So that brings us to the conclusion of today's webinar. Thanks very much everyone, and goodbye.

38:34