The consultation paper outlines the benefits of using novel technologies for developing the financial services market.
The Central Bank of Russia has earlier today published a consultation paper about the development of RegTech and SupTech. The bank would like financial market participants to have their say on the topics and questions raised by the paper.
The Central Bank notes the benefits of RegTech and SupTech solutions. For instance, financial services firms may optimize their compliance with regulatory requirements, as well as boost the stability of certain procedures like client identification. SupTech solutions allow regulators to automate and simplify administrative procedures, as well as improve complex decision-making processes. The Bank of Russia is already working on a number of such projects: for instance, daily collection of bank transaction data.
The “Megaregulator” warned, however, that the development of new digital solutions is accompanied by changes in the risk profiles of financial market participants. That is why, according to the Central Bank, there has to be adaptation of the evaluation procedures and risk controls.
The Central Bank proposes to market participants to voice their opinion on which of the outlined regulatory changes may be optimized via the usage of digital tools (cloud technologies, machine learning, centralized tools for gathering and processing of data, etc). Market participants are also invited to comment on the regulatory areas which are most fit for the application of RegTech and SupTech solutions. They are also asked to comment on the possible forms of collaborations of banks, developers and regulators in order to realize various projects. The Russian “megaregulator” also proposes to discuss possible removal of legislative hurdles during the process of testing of new technologies.
The Central Bank expects comments on the paper not later than November 16, 2018.
Let’s recall that, in April this year, the Russian “megaregulator” launched a regulatory sandbox, which welcomes all entities that develop or use innovative services whose implementation requires regulatory changes.
The sandbox works as a platform for modeling the processes of the use and application of innovative financial services, products and technologies. Checks of the positive effects of their implementation will be carried out. Based on the results of the pilot, the service may be approved and then a plan will be elaborated for the implementation of this new service.
The establishment of the regulatory sandbox is in line with the key fintech priorities that the Central Bank has set itself for 2018-2020. In a document, published in February this year, the Central Bank said it planned to transform the Russian digital environment for financial services via the development of new infrastructure, including a platform-marketplace for financial products and services, a platform for the registration of financial transactions and a platform based on DLT.