In a recent International Banker article, journalist Joseph Moss examines the rise of supervisory technology (SupTech) and its growing role in financial oversight. As regulatory bodies confront a faster, more fragmented financial system — and reckon with past supervisory failures — SupTech is emerging as a critical tool for more agile, data-driven supervision.
SupTech differs from its cousin RegTech by flipping the lens: it empowers supervisors, not banks, to streamline data collection, identify emerging threats, and cut through reporting delays. A recent study from the Bank for International Settlements found that these tools are doing more than improving process — they're changing behavior. The research, conducted at the Central Bank of Brazil, found that banks targeted by SupTech-driven scrutiny disclosed more non-performing loans and tightened lending to higher-risk borrowers, all without systemic economic fallout.
Yet the path from innovation to impact isn't automatic. As Elizabeth McCaul, then a member of the Supervisory Board of the European Central Bank, emphasized last year, embedding SupTech into supervisory culture — not just infrastructure — is critical. "We aim to instil a culture that supports the adoption of our SupTech tools and embeds advanced technology into regular supervisory processes," McCaul said. "We are convinced that having a clear user focus in all our technological activities and ensuring an enhanced user experience will encourage the take-up of our tools."
For more from Elizabeth McCaul, read her Preamble to the 2024 Compendium.
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