More Data? 

Posted on March 27, 2023 by Editor

Financial regulation has been in the spotlight recently as uncertainty, driven by Silicon Valley Bank (SVB) in the US and Credit Suisse in the EU (see above), continues.

While digitalisation has offered opportunities to remove errors and speed up the exchange of financial information, a recent article on the World Economic Forum argues that it hasn’t been used to its full potential. According to Diana Paredes, digital reporting could underline the next generation of reg-tech solutions to help reduce the risk of another banking crisis with better, faster financial reporting.

She argues that data could be ‘pulled’ from firms on demand, rather than pushed (e.g., reported regularly in line with industry reporting timelines). This might speed up the flow of financial information.

Our take? Recent banking turmoil has shown just how much can change in a few short hours – history might indicate that increased frequency and intensity of financial reporting is likely to result. A ‘pull’ system for financial regulatory data could also play a part in reducing risk by giving regulators direct access to bank data. Of course, there remain strong arguments around moral hazard, cyber-security and regulatory reputation that might counteract these kinds of approaches, but continuous improvement and ongoing experimentation are most certainly called for. The use of standards to drive quality and permit innovation at scale is key to all of this.

Read more here.

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