EBA underlines need for trust as industry adopts big data and analytics
The European Banking Authority (EBA) has released a report into the key challenges the industry may face as the use of big data and machine learning increases.
Trust will be key in the development of data analytics, says EBA
Released as part of the EBA’s FinTech Roadmap project, whereby the regulator aims to identify and keep track of emerging trends in the industry and analyse their inherent risks, the report has identified four key pillars which the EBA believes will be necessary to supporting the roll-out of advanced analytics: data management, technological infrastructure, organisation and governance and analytics methodology.
“Through its ongoing interaction with the relevant stakeholders and by utilising its innovation monitoring tools, the EBA observed a fast-growing interest in the use of [big data and advanced analytics],” the EBA writes.
“The aim of this assessment is to share knowledge among the stakeholders and, in particular, to ensure regulators and supervisors are well informed on the developments, in an effort to support technological neutrality across the regulatory and supervisory approaches.”
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It adds that two out of three credit institutions based in the European Union are already in production with solutions based on the new technology.
“In general, most institutions are currently using simpler algorithms, leveraging on their core banking data. However, the current landscape can evolve in a rapid pace in the next few years.”
In its report, the regulator states that additional efforts would be required to ensure that big data analytics developments integrate elements of trust.
“The EBA will continue monitoring the developments in line with the pace of employment of new technologies in financial services and, where appropriate, will perform additional work to enhance supervisory consistency and facilitate supervisory coordination,” it writes.
