The Financial Stability Board ("FSB") reported on the risks and opportunities created by the use of technology by regulatory authorities to improve supervision ("SupTech") and by regulated institutions to improve compliance ("RegTech"). The FSB stated that the emergence of SupTech and RegTech follows a substantial increase in data availability and granularity, and the creation of better data infrastructures and technologies (e.g., cloud computing and application programming interfaces).

Based on survey data, the FSB concluded that most regulatory authorities had in place a SupTech innovation or data strategy - which represents a significant increase in the use of such strategies since 2016. The FSB found that SupTech use has increased for misconduct analysis and microprudential supervision, but has decreased as to market surveillance. The FSB stated that artificial intelligence applications are the most common deployment of SupTech strategies.

In addition, the FSB emphasized the benefits of senior management support and early interaction with users of SupTech and RegTech tools, as well as collaboration among authorities, technology vendors and regulated institutions. Respondents highlighted the role of standards for data, and effective data and technology governance frameworks. Further, respondents expressed concerned about risks arising from resourcing, cyber risk, reputational risk and quality control.

The report contains 28 brief case studies that give insight into the practical use of SupTech and RegTech tools. The report will be delivered to the G20 Finance Ministers and Central Bank Governors in advance of their meeting on October 14, 2020. Case study No. 24 (page 57) describes the Federal Reserve Board's use of natural language processing.

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