EBA Publishes Report on Adoption of Big Data and Advanced Analytics
EBA published a report that addresses the key considerations in the development, implementation, and adoption of big data and advanced analytics in the banking sector. The report also covers the recent trends in big data and advanced analytics. The report highlights that a data-driven approach is emerging across the banking sector, affecting business strategies, risks, technology, and operations of banks. The report focuses on the big data and advanced analytics techniques and tools, such as machine learning, which is a subset of artificial intelligence; these tools go beyond traditional business intelligence to gain deeper insights, make predictions, or generate recommendations using various types of data from various sources.
Through its ongoing interaction with the relevant stakeholders and by utilizing its innovation monitoring tools, EBA has observed a fast-growing interest in the use of big data and advanced analytics solutions, with two out of three EU credit institutions already having such solutions in production. All functions across institutions might benefit from the big data and advanced analytics applications, as they could improve existing services from an efficiency, productivity, and cost saving perspective or create new business opportunities. Most institutions are currently using simpler algorithms, leveraging on their core banking data. However, the current landscape can evolve at a rapid pace in the next few years.
The report identifies data management, technological infrastructure, analytics methodology, and organization and governance as the four key pillars for the development, implementation, and adoption of big data and advanced analytics. The report finds that the roll-out of big data and advanced analytics affects issues around trustworthiness and notes a number of fundamental trust elements that need to be properly and sufficiently addressed and these cut across the four key pillars. Efforts to ensure that artificial intelligence/machine solutions built by institutions respect these trust elements could have implications for all the key pillars. These trust elements are ethics, explainability and interpretability, fairness and avoidance of bias, traceability and auditability, data protection, data quality, security, and consumer protection. EBA is of the view that additional efforts are needed to ensure that big data and advanced analytics solutions respect and integrate these “elements of trust.” Toward meeting this objective, a risk-based approach could apply on certain “elements of trust,” depending on the impact of each big data and advanced analytics application.
Going forward, EBA will continue to observe (taking into account other work being done by ESAs and work being done in other international fora) and consider the pace of evolution of big data and advanced analytics in financial services (in line with its FinTech Roadmap). Where appropriate, EBA will accompany this work with opinions and/or proposals for guidelines to achieve a coordinated approach to the regulatory and supervisory treatment of artificial intelligence and big data and advanced analytics activities.
Related Links
Keywords: Europe, EU, Banking, Big Data, Advanced Analytics, Fintech, Machine Learning, Artificial Intelligence, Fintech Roadmap, EBA
Previous Article
FIN-FSA Publishes New Demo Workbooks of Its Reporting ApplicationRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
