The necessity of using supervisory technology

'With the banking sector embracing digitalisation, banking supervisors must also adapt'. These are the words of Pentti Hakkarainen, Member of the Supervisory Board of the ECB, in a speech published on 27 May.

To date, much of the conversation around the innovative use of technology has focused on the banks themselves with the competitive challenges posed by 'fintechs' and 'bigtechs' coming to the fore. However, the need to digitise is not lost on banking supervisors. 

ECB Banking Supervision is engaged in the process of becoming a digital innovation house. Its vision is based on four building blocks: an effective innovation model, a digital culture, an innovation ecosystem and successful delivery of business-related use cases.

The innovation model involves collaboration with national competent authorities to take forward 'SupTech' projects. This model ties in with the delivery of business-related use cases which is aimed at providing frontline supervisors with concrete technological tools. These tools may include advanced analytics helping supervisors to link data sources and to glean more from large quantities of data. The other tool mentioned is a speech-to-text tool that automatically converts human speech to written text to keep records of discussions with supervisors.

The overall message is clear, supervisors are turning to technology to enhance their supervisory capabilities, and firms may start to see new tools being used by supervisors in the not too distant future.