CeFPro’s latest study 'The State of Financial Reporting in Banking' exposes the widening gap between perceived reporting readiness and regulatory expectations in banking - revealing why legacy systems, manual processes, and siloed teams are putting instit
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The financial reporting landscape in banking is undergoing a
period of significant turbulence. As regulatory demands intensify and
operational challenges persist, banks are beginning to question whether their
current reporting frameworks can keep pace. The Center for Financial
Professionals (CeFPro)’s recent study, “The State of Financial Reporting in
Banking,” provides an in-depth look at how financial institutions perceive
their reporting capabilities—and how those perceptions often diverge from regulatory
expectations.
A Landscape Defined by Complexity
CeFPro’s research involved a two-phase approach, beginning
with a survey of 149 banking professionals worldwide and followed by in-depth
interviews with industry experts. Respondents were primarily based in EMEA,
North America, and the UK, and represented a mix of institutions—though a
majority managed under $100 billion in assets, highlighting a greater
representation from smaller banks.
The study paints a picture of a sector under pressure. Over
half (58%) of banking professionals expressed concern about how regulatory
changes might affect their financial reporting. This worry stems from a variety
of sources, including manual reporting processes, inefficient workflows,
disconnected systems, and an ever-evolving compliance landscape.
Discrepancies Between Confidence and Compliance
Perhaps the most striking finding in the report is the
contrast between internal confidence and regulatory readiness. An overwhelming
87% of respondents claimed to have confidence in the accuracy of their
financial data. However, when asked how they believed regulators would view
their end-to-end record-to-report process, 54% anticipated that areas for
improvement would be identified.
This gap suggests that while banks may feel secure in their
processes, they may not be fully prepared for the intense scrutiny that
regulatory audits demand. The European Central Bank (ECB) has already called
out institutions for slow progress on implementing effective risk data
aggregation, underscoring the growing tension between self-assessment and
regulatory expectations.
Manual Processes: The Root of Inefficiency
Financial reporting in banking remains highly manual and
labor-intensive. Nearly one-third (29%) of respondents described their
reporting processes as inefficient, and over half rated them as only somewhat
efficient. Manual data collection was cited by 47% of respondents as the
greatest challenge to meeting reporting deadlines, followed by workflow
inefficiencies and disconnected systems at 43%.
In fact, 23% of banking teams spend between 41% and 60% of
their time on financial reporting tasks alone. This heavy time commitment
diverts critical resources away from strategic analysis and decision-making.
While smaller banks often rely on manual systems due to limited budgets, larger
institutions cling to outdated legacy systems because replacing them is costly
and disruptive.
Mergers and acquisitions add further complexity. In many
cases, disparate systems are never fully integrated, creating data silos and
disconnected workflows that persist over time. This fragmentation complicates
automation efforts and perpetuates bottlenecks throughout the reporting cycle.
Automation: A Strategic Necessity
The solution, experts agree, lies in automation. Integrated
data management systems can dramatically reduce manual workloads, minimize
errors, and increase the speed and accuracy of reporting. Automated systems
also help create audit trails, enabling better oversight and traceability—key
expectations from modern regulators.
Yet despite its benefits, the adoption of automation remains
limited. Many institutions prioritize other investment areas and struggle to
demonstrate the return on investment for financial reporting systems. Moreover,
some senior executives still view reporting primarily as a compliance
obligation rather than a value-generating function.
Experts caution that automation should be implemented with a
clear strategic goal in mind—not merely to reduce manual tasks, but to enhance
reporting accuracy, strengthen decision-making, and improve scalability as
regulations evolve.
Common Errors and Risks
The survey also sheds light on the most common errors in
financial reporting. Nearly half (49%) of banking professionals cited
inconsistent data across documentation as a frequent issue. This was followed
by data entry or calculation mistakes (34%), late report submissions (27%), and
version control problems (16%).
