Featured Product

    FSB Examines Use of Suptech and Regtech by Regulators and Institutions

    October 09, 2020

    FSB published a report that examines the use of supervisory (suptech) and regulatory (regtech) technology by FSB members and regulated institutions. The report finds that technology and innovation are transforming the global financial landscape while presenting opportunities, risks, and challenges for regulated institutions and authorities alike. The report includes 28 case studies, giving practical examples on how suptech and suptech tools are being used. The report is being delivered to G20 Finance Ministers and Central Bank Governors for their virtual meeting on October 14, 2020.

    The opportunities offered by suptech and regtech have been created by the substantial increase in availability and granularity of data and new infrastructure such as cloud computing and application programming interfaces. These allow large data sets to be collected, stored, and analyzed more efficiently. Authorities and regulated institutions have both turned to these technologies to help them manage the increased regulatory requirements that were put in place after the 2008 financial crisis. Thus, suptech and regtech tools could have important benefits for financial stability. For authorities, the use of suptech could improve oversight, surveillance and analytical capabilities and generate real-time indicators of risk to support forward looking, judgment based supervision and policymaking. For regulated institutions, the use of regtech could improve compliance outcomes and operational efficiencies (for instance, by reducing costs of data collection and reporting), enhance risk management capabilities, and generate new insights into the business for improved decision-making.

    For both authorities and regulated institutions, the efficiency and effectiveness gains, along with the possible improvement in quality arising from automation of previously manual processes, is a significant consideration. The themes that have emerged from the report give rise to the following areas for consideration:

    • Authorities may need a well-defined and user-centric suptech strategy and they may benefit from an early and ongoing dialog with the end-users of these tools.
    • Authorities may seek to establish a comprehensive strategy for attracting and retaining the necessary talent base with the necessary digital skillsets. To keep abreast of technological developments, authorities might consider engaging and seeking innovative collaboration with a range of external parties, such as other financial authorities, the academic community, technology vendors, and international organizations.
    • Both authorities and regulated institutions may seek to focus on the significant opportunities that exist in the area of data collection. Going forward, based on the survey responses, authorities may increasingly look to develop application programming interfaces or micro-service interfaces that allow regulated institutions to programmatically submit data, or authorities to pull data, depending on the context and specific use cases. Authorities might also choose to migrate away from the use of legacy systems to ensure system compatibility with the latest standards and technologies. Tools or solutions that improve data collection could also benefit from common data standards.
    • Standard-setters and authorities may wish to consider evaluating the scope for common data standards and taxonomies for relevant regulatory areas, including the potential for international collaboration, in order for reporting solutions to be made more scalable and interoperable.
    • With the rapid growth in the amount and richness of data collected, authorities may also benefit from expanding the range of tools they employ for data analysis, leveraging emerging technologies. With the adoption of more tools providing predictive and prescriptive analytical outputs, this could bring about significant improvement in actionable, meaningful, and forward-looking risk surveillance and mitigation. Also, the use of advanced analytical tools raises the need for adequate data governance frameworks, which authorities may wish to explore further. This would help ensure the explainability of these tools and transparency as to how results of the tools inform decision-making, thus promoting accountability within authorities.
    • Both authorities and regulated institutions may wish to adopt an approach and environment that encourages "fast fails" and dynamic idea-sharing. Given that suptech and regtech are still relatively new fields, not all pilots and proofs of concepts are likely to succeed initially. In turn, authorities and regulated institutions could encourage and foster a spirit of collaboration and innovation; authorities could also encourage open dialogs and debates that will lay the foundation for the future regulatory landscape.

     

    Related Links

    Keywords: International, Banking, Insurance, Securities, Regtech, Suptech, Automation, Operational Risk, FSB

    Related Articles
    News

    Regulators Fine Goldman Sachs for Risk Management Failures

    FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).

    October 23, 2020 WebPage Regulatory News
    News

    Canada Hosts International Conference of Banking Supervisors

    BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.

    October 22, 2020 WebPage Regulatory News
    News

    FCA Proposes More Measures to Help Insurance Customers Amid Crisis

    FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.

    October 21, 2020 WebPage Regulatory News
    News

    EBA Issues Opinion to Address Risk Stemming from Legacy Instruments

    EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.

    October 21, 2020 WebPage Regulatory News
    News

    ESRB Publishes Non-Bank Financial Intermediation Risk Monitor for 2020

    ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).

    October 21, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Policy Statement Amending Benchmarks Regulation

    HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.

    October 21, 2020 WebPage Regulatory News
    News

    APRA Initiates Action Against a Bank for Liquidity Compliance Breach

    APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.

    October 21, 2020 WebPage Regulatory News
    News

    PRA Consults on Implementation of Certain Provisions of CRD5 and CRR2

    PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).

    October 20, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Rule to Reduce Impact of Large Bank Failures

    US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).

    October 20, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Rule on Net Stable Funding Ratio Requirements

    US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.

    October 20, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6004