- The Basel Committee has published a report on the impact of financial digitalization on banks and supervision.
- The report considers both the benefits and risks of new technologies and the emergence of new technology-enabled suppliers to provide banking services.
- The report identifies eight implications for banks and supervisors related to macro-structural factors, specific digitization themes, capacity building and coordination.
The Basel Committee on Banking Supervision has published the following report: report Considers the impact of the ongoing digitalization of finance on banking and supervision. This report is based on: Sound practices: How fintech developments are impacting banks and banking supervisors This book, published in 2018, provides an overview of recent developments in the digitalization of finance.
The report reviews the use of key disruptive technologies across various aspects of the banking value chain, including application programming interfaces, artificial intelligence and machine learning, distributed ledger technology, and cloud computing, and also considers the role of new technology-enabled suppliers (including large technology companies, fintech companies, and third-party service providers) and business models.
Digitalization benefits both banks and their customers, but it can also create new vulnerabilities and amplify existing risks. These are likely to include greater strategic and reputational risks, broader factors that may test banks' operational risks and resilience, and potential system-wide risks due to increased interconnectivity. there is. Although banks have implemented various strategies and practices to mitigate these risks, effective governance and risk management processes remain fundamental.
Digitalization raises regulatory and supervisory implications for both banks and supervisors. These include:
- Monitor evolving risks and adopt a responsible approach to innovation.
- Protect your data and implement robust risk management processes.and
- Ensure you have the resources, staff, and capabilities needed to assess and mitigate risks from new technologies and business models.
The Committee will continue to monitor developments related to financial digitalization. If appropriate, consider whether additional standards or guidance are needed to mitigate risks and vulnerabilities.
Source:BIS
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