The New York Department of Financial Services (DFS) has scheduled its first-ever “Techsprint” that will take place in 2021. The event will focus on digital regulatory reporting for virtual currency companies.
As New York is a global financial hub, many Fintech firms are based in the state. DFS has also been at the forefront of regulating digital asset firms. DFS said it will collaborate with the Conference of State Bank Supervisors (CSBS) and the Alliance for Innovative Regulation (AIR). Regulatory Technology, or Regtech, is a hot subset of Fintech as much compliance can be automated thus streamlining the regulatory process.
DFS said this effort 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 objective is to create a common Digital Regulatory Reporting (DRR) ecosystem.
“The future of financial supervision is digital and needs to happen now. With this first-ever Techsprint series, the Department 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.”
DFS said that regulators need access to more immediate information about the financial and operational conditions of the firms they oversee.
During this year’s pandemic Regtech has taken on more importance as reporting has been delayed as a form of relief to the industry. Meanwhile, financial regulators are transitioning to digital examinations in lieu of onsite examinations due to social distancing requirements.
Today, financial services firms submit periodic reports to regulators – in some cases quarterly, and in some cases only annually. Many of these reports are transmitted by paper and processed manually. Obviously, this is not very efficient and costly. Additionally, the information provided may suffer from data quality issues. Regtech has the potential to fix all of this.
“AIR is delighted to work with DFS and CSBS on this mold-breaking techsprint tackling one of the most urgent challenges in financial regulation, especially in a time of pandemic — how regulators can get more and better information about what’s happening in the financial system, faster,” said Jo An Barefoot, CEO and Cofounder of AIR. “Digitized regulatory reporting can bring light into current blind spots and can enable data analysis through artificial intelligence. It’s the future of financial regulation.”
CSBS President and CEO, John W. Ryan added that they are pleased to be partnering on the event:
“This techsprint is a great example of the state system’s commitment to flexible and timely access to data. The pandemic has emphasized how real-time data can empower the system.”
The Techsprint is expected to 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 several days, each team will collaborate on a proposed solution. Those solutions may range from process improvements to a functional prototype of a reporting mechanism. DFS hopes to be able 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.
Design workshops are planned for this fall.