On 7 January 2020, the Bank of England (BoE) published a Discussion Paper, Transforming data collection from the UK financial sector, to improve the timeliness and effectiveness of data collection from firms across the financial system. On the same date the FCA refreshed its Data Strategy setting out a transformation plan to become a highly data-driven regulator.

The BoE has published its Discussion Paper in order to start a dialogue with regulated firms and solution vendors to shape the evolution of reporting over a 5 to 10 year horizon. The Discussion Paper does not put forward a preferred solution, but rather sets out a framework for assessing the issues and an initial range of potential options. The options discussed draws ideas that were explored in the Future of Finance report and the pilot on digital regulatory reporting. The deadline for comments on the Discussion Paper is 7 April 2020.

The FCA Data Strategy outlines the regulator’s increased focus on the use of advanced analytics and automation techniques to deepen its understanding of how markets function and allow the FCA to efficiently predict, monitor and respond to firm and market issues. Alongside investment in new technology and increased use of external data, the FCA will pursue a broader transformation, investing in skills and new ways of working to enable it to better understand and use data and innovative technology. The approach includes the establishment of data science units in selected parts of the regulator and exploitation of new opportunities arising from the FCA’s migration to cloud-based IT infrastructure.

Over the next 12 months the FCA will focus on:

  • increasing its data science resource throughout the organisation, making it a core capability, and growing its overall data and analytics skills via a comprehensive learning and development programme;
  • testing and deploying new tools such as web scraping, network analytics and natural language processing for a wide range of scenarios;
  • looking at how it can use new tools and techniques to transform the way it detects financial crime;
  • seeking to improve the flow and quality of valuable public and commercial data it collects;
  • investigating how technology can fundamentally change the interface between itself and regulated firms by making parts of the Handbook machine-readable and executable; and
  • modifying its risk and control framework to ensure it uses its new tools and techniques safely.

In addition, the FCA, the BoE and seven regulated firms have jointly published a Viability Assessment report on the latest Digital Regulatory Reporting (DRR) pilot. DRR will potentially allow firms to automatically supply data requested by the regulators, thereby reducing the cost of collection, improving data quality and reducing the burden of data supply on the industry. This document covers an assessment of the technological and economic factors that may impact a shift towards more automation in regulatory reporting.