Peering through the hype - assessing suptech tools' transition from experimentation to supervision

Recent episodes of banking stress underscore the need for supervisors to identify issues at an early stage and ensure that financial institutions address them adequately. However, inadequate resources – including unavailability of effective tools – affect supervisory authorities' ability to act in a timely manner. In this context, much hope is pinned on the promise of supervisory technology (suptech) in helping enhance supervisory ability. Over the years, many authorities have experimented and developed suptech tools, and an increasing number of these tools have already been deployed. However, it remains unclear whether the deployed tools have become critical to supervision. This paper identifies factors that could contribute to achieving this outcome by examining authorities' experiences in deploying suptech tools. In doing so, the aim is to help supervisory authorities maximise the potential of suptech in enhancing the efficiency and effectiveness of their supervisory processes.

JEL classification: C45, C88, C89, G20, G38, O31, O32

Keywords: suptech, financial supervision, innovation, artificial intelligence, GenAI, machine learning