Featured Product

    BoE Governor Outlines Work on Using Technology for Bank Supervision

    April 29, 2019

    While speaking at the Innovate Finance Global Summit in London, the BoE Governor Mark Carney examined the opportunities offered by innovation in the financial services and discussed the actions of BoE toward embracing and supporting the financial innovation. He outlined work of BoE toward modernizing payments system, addressing climate change risks, and utilizing technology innovatively to supervise the financial sector.

    Mr. Carney mentioned that, last year, he announced that Huw van Steenis would lead a review of the future of the UK financial system, including recommendations for how BoE should respond. In two months, Huw will publish his conclusions and BoE will announce a number of concrete steps to create an environment for a more resilient, effective, and efficient financial system. 

    He emphasized that big data is opening up new opportunities for more competitive, platform-based finance of small and medium enterprises. Search and social media data are supplementing traditional metrics to unlock finance for smaller enterprises whose assets are increasingly intangible. He also highlighted that BoE is building a platform for fintech innovation, which considers how general purpose technologies, including advanced analytics such as artificial intelligence, can increase the resilience of the financial system. The financial sector is investing heavily in the Cloud, machine learning, and artificial intelligence, said Mr. Carney. Banking is already the second biggest global spender on artificial intelligence systems (after retail) and is expected to invest a further USD 10 billion on artificial intelligence by 2020. Solutions enabled through artificial intelligence are increasingly important in fraud detection as well as automated threat intelligence and prevention. There is also significant potential in credit assessments, wholesale loan underwriting, and trading. Such advanced analytics are also likely to lead to changes to the way BoE conducts supervision.

    Mr. Carney added that PRA promotes safety and soundness based on forward-looking, judgment-based supervision, in which it identifies the key risks facing firms and sets supervisory strategies to mitigate them. As a process, it can be broken down into three simple steps: rule-setting and reporting; analysis and monitoring; and setting and communicating a supervisory strategy to mitigate identified risks. Each of these aspects of supervision is amenable to automation, machine learning, or artificial intelligence to some extent.

    With regard to rule-setting and reporting, he said: "At over 638,000 words, the PRA Rule Book is longer than War and Peace. It is also somewhat less interesting and infinitely more complex. We are currently using advanced analytics to understand the complexity and interconnectedness of the PRA rulebook, to identify ways to simplify our rules, and to make compliance with them easier for firms." He added that BoE is also exploring ways to make reporting more efficient and effective. To this end, it is running a Digital Regulatory Reporting pilot, with FCA, on machine-readable reporting requirements, which firms’ systems could interpret and ultimately automate regulatory data collection. These initiatives create the potential to unlock the power of artificial intelligence to improve the quality supervision by BoE. He concluded that, "By adapting our hard and soft infrastructure, the Bank of England will help create the conditions for such innovation to flourish to promote the good of all the people of the United Kingdom."

     

    Related Link: Speech

     

    Keywords: Europe, UK, Banking, Insurance, Regtech, Suptech, Big Data, Digital Regulatory Reporting, Machine-Readable Regulations, BoE

    Related Articles
    News

    SEC Adopts Rules and Amendments Under Regulatory Regime for Swaps

    SEC announced that it took a significant step toward establishing the regulatory regime for security-based swap dealers (SBSDs) by adopting a package of rules and rule amendments under Title VII of the Dodd-Frank Act.

    September 19, 2019 WebPage Regulatory News
    News

    APRA Revises Standard on Margin Rules for Uncleared Derivatives

    APRA revised CPS 226, which is the prudential standard on margin and risk mitigation requirements for non-centrally cleared derivatives.

    September 19, 2019 WebPage Regulatory News
    News

    BIS Formalizes Agreement to Set Up Innovation Hub in Hong Kong SAR

    BIS and HKMA signed the Operational Agreement on the BIS Innovation Hub Center in Hong Kong Special Administrative Region (SAR).

    September 18, 2019 WebPage Regulatory News
    News

    PRA Proposal on Probability of Default and LGD Estimation

    PRA proposed, via the consultation paper CP21/19, an approach to implementing EBA’s recent regulatory products relating to Probability of Default (PD) estimation, Loss Given Default (LGD) estimation, and the treatment of defaulted exposures in the internal ratings-based (IRB) approach to credit risk.

    September 18, 2019 WebPage Regulatory News
    News

    PRA Issues Consultation on Prudent Person Principle Under Solvency II

    PRA, via the consultation paper CP22/19, has set out its proposed expectations for investment by firms, in accordance with the Prudent Person Principle (PPP).

    September 18, 2019 WebPage Regulatory News
    News

    CFTC Extends Comment Period for Proposals on Cross-Border Clearing

    CFTC announced that it is extending, until November 18, 2019, the comment period for the proposal for an alternative compliance framework for derivatives clearing organizations (DCOs) that are organized outside of U.S. and that do not pose substantial risk to the U.S. financial system.

    September 18, 2019 WebPage Regulatory News
    News

    BNM Publishes Financial Stability Review for the First Half of 2019

    BNM published Financial Stability Review for the first half of 2019.

    September 18, 2019 WebPage Regulatory News
    News

    APRA Observations from Thematic Review on Recovery Plans of Insurers

    APRA issued a letter to general insurers and life insurers, outlining observations from a recent thematic review on recovery planning by insurers.

    September 18, 2019 WebPage Regulatory News
    News

    FASB Issues Summary of Tentative Board Decisions at September Meeting

    FASB published a summary of the tentative decisions taken at its Board meeting in September 2019.

    September 18, 2019 WebPage Regulatory News
    News

    EIOPA Forms Consultative Expert Group on Digital Ethics in Insurance

    EIOPA established the Consultative Expert Group on Digital Ethics in Insurance to assist EIOPA in the development of digital responsibility principles in insurance.

    September 17, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3848