#8: The Impact of Suptech on Banking Supervision

Suptech Broadcast

15 Aug

30th August 2023

With:

| Ramunas Baravykas (Bank of Lithuania)

| Jermy Prenio (Bank for International Settlements (BIS))

Guests Jermy Prenio (BIS) and Ramunas Baravykas (Bank of Lithuania) join FNA to share their frontline experience in digitizing oversight. As the Bank of Lithuania has established itself as a global "Suptech Hub," Ramunas provides a blueprint for how a central bank can transition from being a passive data recipient to an active, real-time analyst.

The conversation centers on the "AI Ethics and Proportionality" dilemma: how much autonomy should we give to algorithms in supervision? Jermy Prenio provides the global perspective from the BIS, highlighting that while data analytics can flag risks with unprecedented speed, the final supervisory judgment must remain grounded in a framework that is transparent, ethical, and legally defensible.

Key Discussion Points:

The Lithuanian Blueprint: Insights into the Bank of Lithuania’s journey toward automated reporting and how it fostered a regional ecosystem for regulatory innovation.
The Proportionality Principle: Discussing how Suptech solutions should be scaled to fit the size and complexity of different financial institutions.
Ethics of AI in Supervision: Addressing the "Black Box" problem and ensuring that algorithmic risk assessments do not lead to biased or unexplainable regulatory actions.
Cross-Border Intelligence: How international collaboration and shared data standards are essential for supervising global banks that operate across multiple jurisdictions.
From Hindsight to Foresight: Moving the supervisory focus from "what happened?" (descriptive) to "what might happen?" (predictive) through machine learning.
The Cultural Shift: Why the biggest hurdle to Suptech adoption is often not the technology itself, but the organizational change required within traditional central banks.

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