Saudi Central Bank (SAMA) Regulatory Reporting Update and the Road to Vision 2030
Saudi Arabia has been heavily investing in the Kingdom’s infrastructure, local talent, and entrepreneurs to position itself as a leading fintech hub since 2018, when the Saudi Central Bank, Saudi Arabia Monetary Authority (SAMA) and the Capital Market Authority (CMA) launched the Financial Sector Development Program (Fintech Saudi). The program, which includes banks, insurance companies, stock and debt markets, investors, and governments, fosters innovation for a strong, responsible, inclusive ecosystem, and long-term growth. It has strengthened financial institutions, advanced the market, encouraged savings, and spurred the growth of fintech startups. Today, Saudi Arabia’s Tadawul is among the top-10 largest capital markets globally, listed on leading international indices such as FTSE Russell, MSCI, and S&P Dow Jones.
Saudi Arabia also actively encourages foreign fintechs and banks to invest and set up entities in the region. The Kingdom has worked to establish a robust regulatory framework and expectations in terms of digitalization and strict governance; it adheres to international standards, including the Bank for International Settlements (BIS) and the International Organization of Securities Commissions’ (IOSCO) requirements to ensure overall stability for the financial services sector; and aligns its regulatory frameworks to adopt best practices for data preparation, validation, submission, collection, and analysis.
The fruition of this endeavour is within Vision 2030. And on the road to achieving the vision, SAMA has published 27 new regulatory reporting updates to banks that will significantly impact their reporting obligations, data granularity, and governance.
Following is a summary of granularity updates that went live in December 2023.
| New Reports: Aggregated reporting data level | |
| New Reports: Granular reporting data level | |
| Updated Reports: Minor update | |
| Updated Reports: Greater granularity of reporting data | |
| Removed Reports | |
| Total |
The Road Ahead For Saudi Regulatory Reporting
Saudi Arabia’s vision is to become the leader in the Middle East financial market, cementing its position as a core market, worldwide. To achieve this, it needs to both diversify its offering to the market and establish a globally-recognized regulatory framework that encourages US, European, and Asian institutions to set up businesses in-country.
With that goal in mind, the proposed regulatory changes are both topical and timely. The focus on increased granularity demonstrates that Saudi regulators are looking for more details to help them monitor financial institutions. This trajectory also aligns with the strategy of authorities around the globe to request a level of granularity that not only establishes a broader analytical database in which greater governance is possible but perhaps more crucially, one that facilitates better-informed strategic decisions. However, granularity demands improved data quality, governance, and controls. In fact, it necessitates an integrated, end-to-end solution.
Furthermore, the drive to reduce its dependency on fossil fuels as a main source of GDP has Saudi Arabia delving into the ESG space. While this realignment pertains to the environmental pillar of the ESG principles, there are also social initiatives around the Kingdom as Saudi Arabia looks to encourage more female inclusion in the economy and a greater focus on the overall integration and pride of society. This seeming focus on improving across ESG pillars portends a requirement for regulatory and ESG reporting, in the short term.
Elements Regulatory reporting requirements
- Increased reporting granularity demands greater attention to data quality, which could be affected by inconsistent report allocation, incorrect tagging, and missing information. This requirement also heavily impacts data sourcing, collection, management, aggregation, and risk calculations.
- Additional requirements as regulators advance more automated and sophisticated reporting methodologies that put new pressures on firms at the disclosure and reporting stages to conform functionally and technically; and at submission via a portal or even to enable direct data collection by the regulator.
- Greater need for governance, integrated solutions, and training. A lack of awareness and understanding of these factors and concepts increases the organization’s learning curve and hinders implementation.
Being Prepared and Futureproofing
The current regulation is manual and spreadsheets-based, which is far from futureproofed for a growing financial market. From a system perspective, the future requires technical solutions that correspond to a new set of requirements including the management of comprehensive and granular datasets, advanced processing capabilities that cater to more frequent executions and granular monitoring horizons, and reporting capabilities that deliver targeted insights for decision making.
Given the updated requirements and the investment already put into creating an international financial hub, it is almost guaranteed that Saudi institutions will need systems that provide robust regulatory reporting i.e., a solution that:
- Has an inbuilt governance framework from data capture, through calculations, to report submission.
- Provides a holistic user interface for the core reporting process including access to key outstanding metrics, audit-adjustment history, sign-off, and submission generation.
- Includes robust coverage across SAMA and CMA requirements.
- Utilizes a universal data interface that isolates the bank from future change, including new requirements.
- Delivers full transparency into and lineage of regulatory rules and reporting data.
All of this, while leaving the bank in control of the data journey and therefore the ability to attest to the correctness of the information presented to the regulator.
Although this level of governance and control might not be mandatory for reporters now, the vision set out by the Kingdom makes these requirements inevitable. Preparation can cater for the now as well as alleviate the rush to comply in the future.
Increased reporting granularity requirements impact data quality, sourcing, collection, management, aggregation, and calculations and knock-on effect such as inconsistent report allocation, incorrect tagging, and missing information.
Additional regulatory requirements for more automated and sophisticated methodologies pressure firms at the disclosure, reporting/submission stages, leading to a greater need for governance, integrated solutions, and training.
