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

    EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package

    EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.

    February 26, 2021 WebPage Regulatory News
    News

    EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway

    The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.

    February 25, 2021 WebPage Regulatory News
    News

    PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks

    In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.

    February 25, 2021 WebPage Regulatory News
    News

    FSB Sets Out Work Priorities for 2021

    In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.

    February 25, 2021 WebPage Regulatory News
    News

    EU Publishes Corrigendum to Revised Capital Requirements Regulation

    EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).

    February 25, 2021 WebPage Regulatory News
    News

    ESAs Issue Statement on Application of Sustainability Disclosures Rule

    ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).

    February 25, 2021 WebPage Regulatory News
    News

    EC Consults on Crisis Management and Deposit Insurance Frameworks

    EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.

    February 25, 2021 WebPage Regulatory News
    News

    HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs

    HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.

    February 24, 2021 WebPage Regulatory News
    News

    EBA Proposes Standards for Supervisory Cooperation Under IFD

    EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.

    February 24, 2021 WebPage Regulatory News
    News

    BoE Addresses Banks in Scope of First Resolvability Assessment

    BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.

    February 24, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6629