About the BIRD

What is the BIRD?

Every time a statistical or supervisory regulatory framework is updated or a new one comes into existence, each bank is left to its own devices to interpret it, extract the data from its internal systems and transform them to derive the final figure asked for in a regulation. It is not always straightforward which source data to use and how to process it to produce the number required in Legislation X, Table Y, Cell Z. The greater the misalignment among banks with regard to the meaning of specific sections within a regulatory standard, the more questionable is the quality of the output data and the more difficult are the comparisons between banks. In-depth studying of revised or new legal acts is a costly and time-consuming process for each bank to carry separately, and one for which cooperation among banks can bring significant efficiency gains.

BIRD: Input Layer (Harmonised Data Model) + Transformation Rules

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The initiative entitled “BIRD” aims to foster such cooperation in the field of regulatory reporting thus alleviating the reporting burden for the banks and improving the quality of data reported to the authorities. “BIRD” stands for “Banks’ Integrated Reporting Dictionary“. Its contents, published on the BIRD website, are based on a harmonised data model describing precisely the data which should be extracted from the banks’ internal IT systems to derive reports required by authorities. In addition to this, there are clearly defined transformation rules to be applied to the data extracted from the banks’ internal IT systems in order to produce a specific final regulatory figure. The univocal categories of the data to be extracted from the banks’ internal IT systems, the so-called “input layer“, together with the transformation rules make up the BIRD.
The purpose of the BIRD is to provide a service to the banks. The BIRD is available, as a “public good“, to banks and all interested parties (e.g. software houses that develop application packages for financial reporting). The adoption of the BIRD by banks is fully voluntary. It can be used as additional documentation (with respect to regulations and guidelines) or as “active dictionary” for procedures developed by banks. The BIRD represents an “input approach” because it doesn’t stop at the regulatory requirements, but goes all the way back to the data in the banks’ internal systems. It should be emphasised, however, that banks remain responsible for the organisation of their internal reporting system.

BIRD: Input Layer (Harmonised Data Model) + Transformation Rules

BIRD input layer

What is out of the BIRD’s scope?

The BIRD is not an IT tool itself nor is the initiative expected to provide such tool. The BIRD does not make any changes to the banks’ internal IT systems. The scope of the BIRD does not cover the mappings of the data from the banks’ internal IT systems to the input layer. The BIRD is not a regulatory act and it is not a new rule. It is a transposition of the legal requirements at a more operational level. In other words, the BIRD provides a formalised representation of how the requirements set in reporting regulations may be satisfied. Its application is fully voluntary.

How will the BIRD be a benefit for the European banks?

The adoption of the BIRD has several advantages:

Different reports can be produced from a single input layer by applying harmonized algorithms → Lower reporting burden for the banks. Greater consistency and quality of the data. No longer a need to manage each mandatory data collection in a separate way.
Well-defined transformation rules, which include the calculations to obtain certain regulatory figures → A univocal interpretation and clarity of regulations. Enhanced compliance with the regulatory requirements.
– Decreased time and effort to analyse and satisfy new reporting requirements → Increased efficiency and lower costs.
Increased awareness, understanding and interest in what is behind data (what they include, how they are produced) → Improved management and use of data.

Which statistical and supervisory regulatory frameworks are (will be) covered by the BIRD?

The intention is that several statistical and supervisory reporting requirements will be covered by the BIRD:

– ECB’s collection of granular credit data and credit risk data (AnaCredit),
– ECB’s Securities Holdings Statistics (SHS),
– ECB’s Monetary Financial Institutions’ Balance Sheet Items Statistics (BSI),
– ECB’s Monetary Financial Institutions’ Interest Rate Statistics (MIR),
– the needs of other statistics, such as the balance of payments and national accounts,
– the additional requirements of the Single Supervisory Mechanism and EBA’s Implementing Technical Standards (ITS), which encompasses Common Reporting (COREP) and Financial Reporting (FINREP).

Cooperation between the authorities and the banks to develop the BIRD

For reasons of efficiency and effectiveness, the BIRD is carried out and maintained by a number of banks participating in the BIRD group in close cooperation with the European Central Bank and National Central Banks. Both banks and authorities have a very strong interest in an appropriate organisation of the information systems of banks, able to produce timely, consistent and high quality data. The production of a meaningful BIRD requires specific knowledge of reporting agents, which calls for joint work and close collaboration between the banking industry and the authorities.

What is the BIRD? Watch the video: