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

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.

    May 12, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    News

    SEC Extends Comment Period on Climate Risk Disclosures

    The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.

    May 09, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8187