The course will focus on the knowledge and skills required for supervisors and regulators in the SEACEN stakeholder space to understand the process for developing and implementing supervisory technology (SupTech) to enhance the effectiveness of offsite monitoring. Offsite monitoring is an essential part of the supervisory process, to identify current and emerging risks, characterize the business model, and in general develop a preliminary opinion on the condition and performance of a bank or financial institution. It is the process to broadly and swiftly gauge financial institutions' business conditions -- in terms of funding conditions, business operations, capital adequacy, liquidity, and profitability -- that may not have been otherwise detected until the next onsite examination.
The Great Financial Crisis, over a decade ago, heralded a far-ranging overhaul of the international architecture for financial regulation, coupled with a deep reflection around the fitness-for-purpose and effectiveness of supervisory efforts. Since the crisis, a raft of new rules has been written and new reporting regimes are still coming down the pipeline in 2020 and beyond. In this regard, financial institutions and regulators in the SEACEN stakeholder space continue to commit significant resources to implement the ongoing change required on top of managing existing supervisory and regulatory obligations.
Over the last 10 years or so, regulators, including SEACEN stakeholders, have demanded more information and tougher compliance requirements from financial institutions they oversee. Whether it be lingering effects the financial crisis, AML lapses, corporate governance failures, behavioural and market conduct issues, there is a deep imperative for SEACEN stakeholders to ensure that obliged entities are meeting the standards enshrined in laws and regulations.
Along with more regulation and more reporting comes the need for more transparent, tech, and data-driven approaches to report and monitor activities with reduced risk and errors. With new technologies to solve regulatory and compliance requirements more effectively and efficiently, RegTech has been one of the hottest investment and entrepreneurship areas, but it also has been a starting point for another area of development – supervisory technology, or SupTech – which offers an opportunity to supervisory agencies much like RegTech brings efficiency to industry regulators and reporting institutions.
Supervisory agencies are increasingly using technology to digitize data, streamline their operational procedures, and automate the regulatory reporting and collection process, while also driving broad-based innovation in policymaking and regulatory strategy. In addition to operational efficiency enablement, SupTech is also driving broad-based innovation in policymaking and regulatory strategy.
At the end of this course policymakers, central bankers and regulators should be able to:
- Understand how off-site monitoring fits into the risk-based supervisory framework and supervisory cycle;
- Identify tools and systems used for offsite monitoring as well as the role of external auditors and corporate governance;
- Discuss the key areas in offsite monitoring that can be enhanced with SupTech including data analytics, Machine Learning, Artificial Intelligence and Natural Language Programming (NLP)
- Distinguish between different use cases currently operational or under development amongst SEACEN stakeholders and regulatory agencies
- Identify the developmental and implementation challenges relating to SupTech
The targeted participants for this course will be policymakers, central bankers and regulators in SEACEN stakeholders who are directly involved in offsite monitoring and/or the development and implementation of SupTech.