"On innovation, generally, we just have to keep going. You can't give up. You can't get frustrated. You can't get overwhelmed. Put one foot in front of the other every day, and partner with industry. On data, and with respect to our supervision, we do have a lot of work to do, and we need help in doing that to become modern, internally, with respect to our own approach to supervision."

- Linda Lacewell, Superintendent of the New York Department of Financial Services

NY Department of Financial Services (DFS) TechSprint Series

 

On October 14th, 2020, Superintendent of the Department of Financial Services, Linda A. Lacewell announced DFS’ first-ever TechSprint series produced in partnership with AIR and the Conference of State Bank Supervisors (CSBS). You can listen to Jo Ann's Barefoot Innovation podcast with Linda Lacewell unveiling the TechSprint plan here.

During the financial crisis, regulators need access to more immediate information about the financial and operational conditions of the firms they oversee. This has become ever more crucial during this year’s pandemic, as financial regulators transitioned to digital bank examinations due to social distancing requirements and as they have grappled with time lags in traditional regulatory reporting.

The goal of this TechSprint Series is to convene regulators and industry stakeholders to work towards a common goal of Digital Regulatory Reporting (DRR), in order to give regulators instant access to more complete data provided by firms under their supervision.

“The future of financial supervision is digital and needs to happen now,” said Superintendent of Financial Services Linda A. Lacewell. “With this first-ever TechSprint series, the Department [DFS] is making progress towards automating the reporting of financial and operational data by our regulated entities, enhancing collaboration between the Department and industry, and helping to foster a safer marketplace for the consumers who depend on it.”

Today, financial institutions submit periodic reports to regulators – in some cases quarterly, and in some cases only annually. Many of these reports are transmitted in legacy formats, which are processed manually. The regulatory information captured sometimes suffers from data quality issues. By the time it has been reviewed, the data may have become too stale to act on meaningfully.

The DFS initiative comes in the context of a trend by global financial regulators to employ TechSprints as a mechanism to rapidly prototype technology solutions to key supervisory problems. The UK Financial Conduct Authority pioneered DRR in a TechSprint on Machine Executable Regulation; this past summer the G-20 and the Bank of International Settlements ran a TechSprint where DRR was one of its three problem statements, and the FDIC is running a rapid prototyping event to modernize bank financial reporting.

The TechSprint will bring together teams of professionals from fintech and the virtual currency industry, their regulators, experts, and technologists working on regulatory compliance solutions. Over a period of days, each team will collaborate on a proposed solution. Those solutions may range from process improvements to a functional prototype of a reporting mechanism. Ultimately, the purpose is to leverage what is learned to develop a set of common standards and an open source technical framework for DRR that could be adopted by DFS and other regulatory agencies.

The first DFS TechSprint will focus on virtual currency companies due to their advanced digital capabilities operating in this space. This will be the first of its kind in the virtual currency space.

Design workshops are planned for this fall, with the techsprint itself anticipated to take place early in 2021. Information about the techsprint can be found at dfs.ny.gov/next. Additional information and details will be added here as they become available.

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