On 9 October 2020, the Financial Stability Board (FSB) published a report on the use of supervisory
(SupTech) and regulatory (RegTech) technology by FSB members and regulated institutions.
The report notes that 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, judgement based, supervision and policymaking. For regulated institutions, the use of RegTech could improve compliance outcomes, enhance risk management capabilities and generate new insights into the business for improved decision-making.
The report states that based on a survey of FSB members, the majority of respondents had a SupTech, innovation or data strategy in place, with the use of such strategies growing significantly since 2016. The most common ‘use cases’ reported by authorities for SupTech tools were in the areas of regulatory reporting and data management. The use of SupTech for ‘misconduct analysis’ and microprudential supervision has increased in recent years, whereas use cases for market surveillance were reported as having reduced somewhat. Despite the opportunities and benefits of SupTech and RegTech, authorities are vigilant to possible risks that could arise from the use of such technologies. Survey responses indicated that the risk reported to be of greatest concern was around resourcing, followed by concerns around cyber risk, reputational risk and data quality issues.
The report contains a variety of case studies giving practical examples of deployment of SupTech and RegTech tools. These include a number of examples related to the COVID-19 experience, which has served both to increase interest in SupTech and RegTech, but also to illustrate where authorities have been able to deploy these solutions to support remote working, crisis response and enhanced surveillance and supervision.
The FSB has also published a report that considers market developments and financial stability implications from the provision of financial services by BigTech firms in emerging market and developing economies (EMDEs). The report finds that the expansion of BigTech firms in financial services in EMDEs has generally been more rapid and broad-based than that in advanced economies