FSI paper urges supervisors to develop ‘suptech strategy’

Financial supervisors stand to gain from technological innovations but would benefit from a clear strategy on putting innovations to work, according to a paper published by the Basel-based Financial Stability Institute.

Dirk Broeders and Jeremy Prenio assess the current landscape of so-called suptech in their paper, published on July 16. Suptech is being deployed as a means of more efficient data collection and data analysis, they note, covering areas such as supervisory reporting and market surveillance.

Potential benefits include “enhanced effectiveness, reduced costs and increased capability”, the authors say. But authorities are also running into several challenges, including constraints on computing power, cyber risks, data quality and the difficulty of hiring the right talent, among others.

In such a complex environment, “supervisory agencies would be best placed to explore the potential benefits of suptech applications if they have a well defined suptech strategy,” the authors say. This should include ambitious but achievable targets, an assessment of data availability and quality, and a “step-by-step action plan” for implementing the strategy.