BSP turns to new tech to back up traditional bank supervision

MANILA, Philippines—The Bangko Sentral ng Pilipinas (BSP) is adopting technology-driven supervision as part of efforts to keep its operations on par with global best practices for the new business landscape brought about by the COVID19 pandemic.

At an online press briefing, BSP Governor Benjamin Diokno said regulators are now using more technological resources to monitor the performance of financial institutions and their adherence to banking regulations.

“Among our current initiatives is the use of technology-enabled supervision that will heavily depend on big data analysis,” he said. “This is fast developing into a promising and viable alternative as this allows supervisors to promptly identify emerging risks with minimal yet efficient use of supervisory resources,” he said.

These measures will complement existing methods of supervision, including onsite visits which recently resumed after being suspended due to restrictions during the lockdown.

“The BSP has already taken initial and careful steps to adopt this approach even before the pandemic,” he said. “Certainly, the health crisis accelerates the BSP’s timeline in this regard,” Diokno added.

To carry out supervisory functions amid health protocols, the BSP used supervisory dashboards and performed risk analytics based on information gathered from various sources, including regulatory reports submitted by BSP-supervised financial institutions.

With the use of data analytics, the BSP:

• Revisited risk assessments and supervisory plans
• Reviewed supervisory concerns, unusual trends or patterns in financial performance
• Closely monitored emerging risk issues
• Identified priorities
• Processed on time applications for additional licenses, new products and services allowing financial institutions to adapt to the situation

The BSP also implemented alternative work arrangements that enhance offsite surveillance, held virtual meetings to reinforce open lines of communication with banks, analyzed system-wide concerns through stress testing and continued to coordinate closely with stakeholders, including industry associations, financial sector regulators and the Anti-Money Laundering Council.

“The pandemic has underscored the need for financial regulators to evolve accordingly,” he said. “Towards this end, the BSP will continue to benchmark its practices with other supervisory authorities around the globe,” Diokno added.

TSB