By: Kantilal Pithia, Charles I Ebienang
13 Jul 2026 7 min read
Banks have a high volume of regulatory reporting obligations, with frequent inconsistencies due to poor quality data practices. As banks set up their Basel 3.1 processes, this is a good opportunity to introduce straight through processing to strengthen their internal controls, create a consistent data flow and automate regulatory reporting. This will reduce pressure on firms and improve alignment with the PRA’s expectations.
The quality of regulatory reporting has been a longstanding issue for the PRA, limiting visibility over firms’ data and with a knock-on effect for effective supervision. To address this, the PRA is taking a two-pronged approach; asking firms to continue to focus on data quality (as per the Dear CEO 2026 priorities letter), while putting forward plans to rationalise the regulatory reporting framework (via DP1/26). These discussions are particularly timely, as banks finalise their Basel 3.1 implementation, which introduces a new wave of reporting requirements.
This presents an opportunity to establish good practice from the off. Banks can adopt straight through processing to automate the data journey, creating a single source of truth from the point of data entry, through to inclusion in a regulatory report.
Many banks still rely on significant manual intervention across their transaction lifecycles, with fragmented systems, duplicate workflows and multiple versions of the same data set. The same reconciliation data is often re-entered, re-checked, and re-reported across the front office, finance and risk. Meanwhile, regulatory returns are compiled by hand from multiple sources, producing data that doesn't reconcile across teams. Each touchpoint introduces greater potential for error, leaving control gaps, and making accountability harder to trace, a point that should be actively addressed when finalising Basel 3.1 implementation.
The quality of Basel 3.1 regulatory reporting will be limited by the strength of the internal control environment and the associated data it produces. Straightthrough processing offers an effective answer to both, through end-to-end automation to strengthen internal control monitoring and maintain data integrity. Key benefits include:
While each individual control adds value, it’s worth noting that they don’t all carry equal weight. Straight through processing drives a shift from detective to preventative controls, reducing the likelihood of problems occurring in the first place.
The PRA continues to view data as the “cornerstone of effective risk management” and presses the importance of robust data governance and controls. If not addressed, the issue will only grow in significance as banks continue to embrace emerging technologies such as AI. When assessing readiness to adopt straight through processing to support Basel 3.1, firms should consider the following stumbling blocks and plan to address them.
BCBS 239 is the standard for aggregation of risk data, and the PRA reminds firms that they need to use it as a benchmark of good practice. While firms have made progress, effective adoption isn’t universal and banks should consider how their Basel 3.1 processes align with the requirements.
Many banks operate across multiple platforms that weren’t designed to work together. Straight through processing relies on interoperability and, in some cases, platform consolidation. So, reliance on legacy systems will increase the risk of inaccurate regulatory returns, regardless of the strength of the control environment.
Automated controls don’t equate to automated oversight. Every Basel 3.1 data flow needs clear ownership, and a senior manager must be responsible for the end-to-end process, ensuring automated exceptions are appropriately resolved.
Parallel reconciliation processes produce conflicting numbers across the front and middle office, relying on manual intervention to align them. Banks need to rethink their Basel 3.1 reconciliation processes to create a cross-line process that can be accessed by all relevant teams.
Drawing on an improved internal control environment and more robust data outputs, banks implementing Basel 3.1 can extend their use of straight through processing to automate regulatory reporting. This can be a huge benefit to banks, who currently have more than 120 PRA capital reporting templates alone, many with overlapping data requirements. There are also around 15 different monthly submissions, creating operational peaks and resource pressure. To compound the issue further, there are multiple submission channels, including BEEDS, RegData and emailed spreadsheets, which all require separate manual preparation.
With the same underlying figures being entered and reformatted multiple times across different templates, there’s a high risk of inconsistency and regulatory reporting errors, which could lead to a resubmission or greater regulatory scrutiny. Straight through processing can improve regulatory reporting for Basel 3.1 through a single data flow that continues through all systems, reducing the potential for errors and documenting all processes to support SMF accountability and audits.
The PRA plans to rationalise its regulatory reporting requirements and assess how effectively it uses that data for a range of different purposes, as outlined in DP1/26. However, these plans will take time to materialise, and the preferred methodology will undoubtedly pivot on the ability to have one single source of truth across the firm. So, establishing straight through processing to support Basel 3.1, can give firms a head start and establish the much-needed groundwork for stronger internal controls and higher-quality regulatory reporting.
Banks implementing Basel 3.1 can embed straight through processing to strengthen their internal controls, embed effective data governance and automate their regulatory reporting. To get started, banks can review the transaction lifecycle end-to-end and map manual intervention points for internal control risks. From there, banks can assess areas where the same data is being processed, reported, or reconciled more than once, and redesign those workflows and data outputs to reduce duplication. Key activities include:
Banks that can embed straight through processing can reduce the burden of regulatory reporting, while strengthening internal controls, improving accuracy and reducing compliance risk.
For more information on applying straight through processing to strengthen Basel 3.1 regulatory reporting, contact Kantilal Pithia or Charles Ebienang.
Straight through processing automates the data journey end to end, so information flows from initial entry to final regulatory report without manual re-keying. It creates a single source of truth, reducing the handoffs and manual touchpoints that introduce reporting errors. It also strengthens internal controls by embedding validation at each step rather than relying on manual review.
In the UK, the PRA's main Basel 3.1 capital regime takes effect on 1 January 2027. Transitional arrangements then run to full implementation on 1 January 2030.
BCBS 239 is the Basel Committee on Banking Supervision's standard for effective risk data aggregation and risk reporting, built on principles first issued in 2013. The PRA treats it as the benchmark for sound data governance, and banks are expected to align their Basel 3.1 data processes with it.
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