Democratising data: APRA’s new approach to quarterly reporting
Data, as they say, never sleeps. It’s estimated that an eye-watering 188,000,000 emails were sent through cyber-space during every minute of 20191. As the volume of data and its sources have multiplied, the role of data in making business decisions has also grown, along with the sophistication of the tools that provide ever-increasing possibilities for interpreting data.
These developments have been matched by a new philosophy in data management called data democratisation, which seeks to make data more accessible by removing bottlenecks and gatekeepers wherever possible. APRA is no stranger to this new way of thinking about data, with a number of initiatives underway to make more of the data APRA collects more accessible to the public.
APRA’s move to increase the transparency of data it collects also aligns with federal government open data policies. As Deputy Chair John Lonsdale stated at FINSIA’s annual ‘The Regulators’ event in November last year: “APRA is now in the process of developing an overarching philosophy for our entire approach to industry supervision […] based on five foundational elements, which together contribute to delivering a sound and resilient financial system. One of those elements is being “open”. In practice, this will see APRA use transparency as an additional measure to lift and reinforce industry standards across a whole range of areas.” In this environment of increasing transparency, APRA is using an “if not, why not” approach to making more data available to the public and looking to providers of data to give specific reasons for any objections they might have.
The data APRA collects has long underpinned its supervisory role promoting the stability of Australia’s financial system by identifying risks to individual institutions. Some of this data is then aggregated and made public in APRA’s statistical publications, along with the data APRA collects on behalf of the Reserve Bank of Australia and the Australian Bureau of Statistics. Some data APRA collects, especially at an entity level, is not published, either due to commercial sensitivity or because its publication may impact financial stability.
Over the past two months, APRA has launched a series of consultations aimed at substantially increasing the amount of data published in the authorised deposit-taking institution (ADI), general insurance (GI) and life insurance (LI) sectors.
In December, APRA outlined plans to determine that all data collected for its quarterly ADI publications should be considered non-confidential, allowing it to be published. That was followed up earlier this month by a proposal to determine all classes-of-business data for GI and all product group data for LI as non-confidential, unless sensitive commercial reasons are determined. As part of these initiatives, APRA has also proposed publishing explanations from individual ADIs, GIs and LIs in relation to material revisions to, or large movements in, their data – including whether or not APRA requested the revision, which will provide the public and analysts with a deeper understanding of large data movements.
Consultation on both initiatives remain open, but what APRA is proposing would substantially expand the volume of data publicly available on all three industries. For example, APRA currently publishes less than 1 per cent of the ADI data it collects due to legal restrictions contained within the Australian Prudential Regulation Authority Act 1998 (APRA Act). The proposed changes to ADI data confidentiality would allow APRA to significantly increase this figure.
Another example of APRA’s increased commitment to expanding the volume and range of data it publishes occurred last year when the new Authorised Deposit-taking Institutions Statistics (MADIS) publication superseded APRA’s Monthly Banking Statistics (MBS). As well as richer, more informative data, this expansion included increased coverage of the industry by publishing individual data about building societies, credit unions and other ADIs for the first time2.
A third example, also recently announced, is the upgrading of the data appearing in APRA’s quarterly property data publication, QPEX. While this will not include disaggregated data, QPEX will feature new and more detailed statistics on residential mortgage lending, such as additional aggregate data on residential property exposures and new housing loan approvals. Changes are due to take effect in March 2020, with the publication of December 2019 data.
APRA’s focus on greater transparency is not just demonstrated in the output of our quarterly reporting in each of the industry sectors outlined above. The breadth, depth and quality of the data collected as part of APRA's supervision of superannuation funds is also having an upgrade under the banner of the multi-year Superannuation Data Transformation project. Launched in November last year, consultation on the initial phase of this project is progressing, with its focus on addressing the most urgent gaps in APRA’s data collection. Phases two and three will focus on increasing the granularity and consistency of the entire superannuation data collection, with their own consultation stages to follow. By heightening transparency, the project will make it easier to scrutinise and reliably compare fund and product performance, especially in the choice segment of the market.
The breadth of these examples show how APRA’s expansion in data transparency is happening on multiple fronts. The balance sought with such an expansion, as with many other aspects of APRA’s supervisory role, is in reporting to a level where the benefits of greater transparency are promoted, but not to an extent that market competitiveness and efficiencies are impeded.
These improvements in APRA’s data transparency will enable the public to be better equipped to perform its own research and analysis, and ultimately make better informed decisions.
1 Data Never Sleeps 7.0: https://www.domo.com/learn/data-never-sleeps-7
2 For more on this see the 'Data find: APRA’s newly expanded Monthly ADI Statistics' article, December 2019.
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $6 trillion in assets for Australian depositors, policyholders and superannuation fund members.