BIS published a report on the fintech data issues based on a 2019 survey conducted by the Irving Fisher Committee on Central Bank Statistics (IFC). In view of the varying impact of fintech across countries and financial sub-sectors, it is essential to ensure that central bank statistics remain comprehensive, accurate, and timely so that they can effectively support policy. The IFC survey focused on four major themes—data demands among central bank users, data gaps, ongoing data collection exercises, and initiatives for further improvement. The report highlights that, to close the identified data gaps, it is key that fintech entities be adequately covered in the statistical reporting perimeter.
Regarding the central bank statisticians and their need for high-quality data to support policy making, fintech gives rise to a number of issues. To shed light on these issues, IFC conducted a survey among its members in 2019. The survey reveals a significant need for fintech data among central bank users, with the strongest requests expressed by the units in charge of payment systems. Information demands are particularly high in the jurisdictions where fintech is most developed. Users are typically interested in lists of fintech entities and on statistics on fintech credit. A key confirmation of the survey is that fintech is creating important data gaps:
- Fintech firms can be classified outside the financial sector if, for instance, they were initially set up as IT companies; such classification issues can be reinforced by the fact that these firms are often small, diverse, and not easy to identify.
- Another issue relates to the lack of granularity of the current statistical framework, since major data collection exercises group together non-bank financial institutions.
- Traditional financial institutions have been embracing innovation by sponsoring technological startups treated as directly controlled affiliates, implying that their fintech activities are blurred in consolidated groups’ reports.
- A large majority of central banks (more than 80%) consider that adjusting reporting requirements as well as collecting instrument-level data on fintech loans (for example, peer-to-peer) and fintech firms’ financial statements would be “very or at least normally helpful.”
To close these data gaps, it is key that fintech entities be adequately covered in the statistical reporting perimeter. Currently, central banks are applying this principle in an ad hoc manner, by assessing new fintech firms on a case-by-case basis in close cooperation with other domestic authorities. A number of initiatives perceived as potentially important, such as adjusting reporting requirements or collecting loan-level data, are implemented in only a limited number of jurisdictions, possibly reflecting their high implementation costs. Official business classification systems should be revisited to ensure that firms engaged in financial intermediation are systematically classified in the financial sector.
Half of the central banks have launched initiatives to close data gaps. The majority of central banks report regular cooperation with other domestic authorities, which is essential to adequately cover fintech firms in official statistical frameworks. There is also a demand for stronger international coordination, not least to enhance classification standards and develop harmonized cross-country statistics, a precondition for any meaningful analysis of the impact of fintech firms on the global financial system.
Related Link: Report (PDF)
Keywords: International, Banking, IFC, Statistics, Big Data, Fintech, Data Gaps, Data Collection, BIS
Previous ArticleBIS Paper Examines Variability in Risk-Weighted Assets of Banks
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).