As regulatory reporting challenges continue to mount, central banks are increasingly adapting their internal systems to provide stronger supervision capabilities – specifically by adopting regtech and suptech solutions.

Central Banking recently surveyed 13 central banks and two supervisory authorities across different regions to gain their perspectives on the implementation of regtech and suptech solutions within their organisations. Of the survey participants, five were located in the Americas (33%), three in Asia-Pacific (20%), three in the Middle East (20%), two in Africa (13.3%) and two in Europe (13.3%).

The respondents agreed that suptech had revolutionised the supervisory process through four major innovations:

• The collection of standardised and periodic data
• Advanced analytical tools and real-time monitoring of quantitative data
• Portals to collect data on demand from on- and off-site supervision teams
• Access to artificial intelligence (AI) tools.

Supervisory data collection

Just over half (53%) of the respondents reported using regtech and suptech, while another is currently implementing the technology. Most financial authorities using these systems consider them essential for data collection and validation, data analysis and data sharing.

One official from a high-income central bank in the Americas said regtech could be “highly beneficial for data collection efforts, which can be further automated, making analysis more accurate and efficient”. Another official said it was considering using technology to streamline its regulatory and supervisory processes, adding that these processes could be “heavily dependent on spreadsheets and on manual data entry, review, analysis and reporting”.

Advanced, real-time analytics

Saving time and accelerating data collection are key drivers for using regtech and suptech. An official from an upper-middle central bank pointed to improved information flows between supervisors and financial market participants, enabling quicker detection of anomalies and risks, and timelier responses to emerging issues. Another central banker stated that regtech and suptech had “contributed to the optimisation of resources (technological and human), as well as automation and data management to carry out supervision and surveillance functions”.

Respondents also agreed that regtech and suptech enable prompt analysis of information provided by financial intermediaries on policy issues related to client due diligence, validation of official sanctions lists, unusual operation monitoring systems and risk assessment within payment systems.

Data standardisation

All the central banks and regulators that use regtech and suptech today (53% of respondents) said they relied on data standards during the data collection process. However, we noted significant variability in terms of the standards reported, even among those operating within similar geographies. On the flipside, of the central banks and supervisory authorities that do not use regtech and suptech, none use technical data formats or standard methodologies to manage their data collection processes. Four (27%) said they plan to in the future, but two (13%) reported having no such intentions.

Without standardised data formats, it becomes difficult to compare data between different institutions and jurisdictions, hindering monitoring and decision-making processes. As more central banks plan to adopt suptech and regtech, increased standardisation will play a pivotal role in fostering more accurate, timely and automated data collection and reporting of workflows, leading to more robust regulatory oversight.

Technology partnerships and sharing knowledge

The survey respondents stressed the value of suptech in developing technology partnerships and facilitating knowledge sharing with fellow central banks, which can drive innovation and mutual efficiencies. Through these partnerships, regulated firms can access cutting-edge tools and best practices, accelerating their own technology development. By working with a suptech provider offering deep regulatory expertise, firms can align their processes with regulatory requirements and build relationships with the wider industry ecosystem. With the exception of one central bank, all survey participants said they shared data with external users. The most common partnerships are with other governmental agencies (13), followed by public (11) and supervised entities (nine).

Overall, supervisory authorities are more prepared than ever to use regtech and suptech tools, enhancing their ability to make meaningful contributions to reporting efficiency. This collaborative dimension can help regulated entities and supervisory bodies unlock the full potential of regulatory reporting data.

AI tools and the cloud

One recurring theme in the survey results was the emergence of AI and the cloud as technology enablers to address existing gaps in suptech and regtech. With one exception, all central banks and regulators said they believed in the potential of AI and machine learning to help them achieve their supervisory mandates. According to one participant, AI and machine learning “could improve data analysis, quality assurance and provide insightful reports for data-driven decisions”. An official from another high-income central bank in the Americas said AI-driven technology could assist with the analysis of large datasets by identifying and flagging patterns in activity from regulated entities.

Among the survey respondents, just over half said they used the cloud. For the organisations that have not implemented, the most common deciding factors concerned security, costs and availability.

Our perspective: the Regnology difference

Overall, the survey results highlight the transformative potential of technology for central banks and reinforce the value of tools that can produce insights from the granular and real-time regulatory data that has proliferated within the increasingly complex financial landscape. The results also suggest that, although central banks view regtech and suptech as key priorities, many are limited by a lack of institutional resources, as well as data and technical constraints, when it comes to production and implementation. Survey participants cited hurdles related to skills, knowledge and infrastructure when implementing suptech and regtech solutions.