The State of SupTech Innovation

The Cambridge SupTech Lab, which is housed within the Cambridge Centre for Alternative Finance (CCAF) at the Cambridge Judge Business School, recently released "The State of SupTech Report 2022." The report details the state of the digital transformation of financial supervision, and presents insights derived from interactions with 146 financial authorities developing and implementing supervisory technology (suptech).

The report shows three key findings:

• Suptech is happening. Most financial authorities have already engaged in suptech efforts.
• Suptech efforts remain in the experimentation stage. Initiatives are primarily focused on improving data collection and basic analysis.
• Most suptech use cases centre around consumer protection and prudential supervision. 59% of financial authorities report suptech applications supporting consumer protection use cases, while 58% report suptech applications that support prudential supervision use cases.

The report also establishes, from its engagement with the financial authorities, a standard by which to track the progress and impact of suptech adoption, allowing leaders to benchmark the progress of their initiatives. And it introduces the "SupTech Taxonomy" and "SupTech Generations 2.0" framework to classify and assess supervisory use cases, technologies, data science tools, and conversations across the ecosystem in a standardized and structured manner.

This framework calls to mind what the CCAF's Director and Co-founder, Robert Wardrop, defined in Starling's 2022 Compendium as a "consensus structure" — one which preserves meaning across organizations and functions. Therein, he calls for regulators, supervised entities, and technology innovators to come together to develop such a consensus structure through which to explore new technologies for managing governance and other ESG risks.

"What should a risk-based, consensus structure for ESG look like?" Wardrop asks. "Regulators, firms and technologists will need to work together in coming years to answer this question comprehensively, practically, and at scale. But one thing we do know even now: compliance- or data science- or tech expertise alone will not produce the answer for them." [Read More]