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

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582