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

FCA Publishes Its Business Plan for the Coming Year

FCA published its Business Plan, which sets out the main areas of focus and priorities for 2019/20.

May 17, 2019 WebPage Regulatory News
News

IASB Issues Work Plan and Meeting Updates for May 2019

IASB published an updated work plan, along with the update of its meeting in May 2019.

May 17, 2019 WebPage Regulatory News
News

CFTC Proposes to Amend Derivatives Clearing Organization Regulations

CFTC proposed amendments to certain regulations applicable to registered derivatives clearing organizations (DCOs) under Part 30 of the CFTC regulations.

May 16, 2019 WebPage Regulatory News
News

APRA Licenses Societe Generale As Foreign Deposit-Taking Institution

APRA granted Societe Generale a license to operate as a foreign authorized deposit-taking institution under the Banking Act of 1959.

May 16, 2019 WebPage Regulatory News
News

EBA Provides Updates on Its Work on Basel III Impact Assessment in EU

EBA is working to finalize the impact assessment on implementation of Basel III standards, in response to the EC call for advice, which was received on May 04, 2018.

May 16, 2019 WebPage Regulatory News
News

ISDA Publishes Two Consultations on Benchmark Fallbacks

ISDA published two consultations on benchmark fallbacks, the comment periods for which expire on July 12, 2019.

May 16, 2019 WebPage Regulatory News
News

Sam Woods of PRA Speaks About Style of Regulation in UK After Brexit

Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of PRA, spoke at the UBS Financial Institutions Conference in Lausanne.

May 16, 2019 WebPage Regulatory News
News

FED Publishes Report Summarizing Regulatory and Supervisory Activities

FED published a report that summarizes banking conditions and the supervisory and regulatory activities of FED, in conjunction with semiannual testimony before Congress by the Vice Chairman for Supervision.

May 15, 2019 WebPage Regulatory News
News

US Agencies Propose to Amend Regulatory Framework for Foreign Banks

US Agencies (OCC, FED, and FDIC) proposed a regulatory framework for foreign banks operating in the U.S. that would more closely match the rules for foreign banks with the risks they pose to the U.S. financial system.

May 15, 2019 WebPage Regulatory News
News

ECB Consults on EONIA to €STR Legal Action Plan

ECB published a consultation, which was launched by the working group on euro risk-free rates, on recommendations to address the legal implications for new and legacy contracts referencing the euro overnight index average (EONIA), as a result of the proposed transition from EONIA to the euro short-term rate (€STR).

May 15, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3089