EBI-探索AI增強(qiáng)銀行監(jiān)管的法律框架

EBIWorkingPaperSeries

2023–no.140

AlessioAzzutti/PedroMagalh?esBatista/Wolf-GeorgRinge

NavigatingtheLegalLandscapeofAI-EnhancedBankingSupervision:ProtectingEUFundamentalRightsandEnsuringGoodAdministration

27/04/2023

Electroniccopyavailableat:/abstract=4430642

TheEuropeanBankingInstitute

TheEuropeanBankingInstitutebasedinFrankfurtisaninternationalcentreforbankingstudiesresultingfromthejointventureofEurope’spreeminentacademicinstitutionswhichhavedecidedtoshareandcoordinatetheircommitmentsandstructuretheirresearchactivitiesinordertoprovidethehighestqualitylegal,economicandaccountingstudiesinthefieldofbankingregulation,bankingsupervisionandbankingresolutioninEurope.TheEuropeanBankingInstituteisstructuredtopromotethedialoguebetweenscholars,regulators,supervisors,industryrepresentativesandadvisorsinrelationtoissuesconcerningtheregulationandsupervisionoffinancialinstitutionsandfinancialmarketsfromalegal,economicandanyotherrelatedviewpoint.TheAcademicMembersofEBIarethefollowing:

1.UniversiteitvanAmsterdam,Amsterdam,TheNetherlands

2.UniversiteitAntwerpen,Antwerp,Belgium

3.AlmaMaterStudiorum–UniversitàdiBologna,Bologna,Italy

4.AcademiadeStudiiEconomicedinBucure?ti(ASE),Bucharest,Romania

5.Universit?tBonn,Bonn,Germany

6.TrinityCollege,Dublin,Ireland

7.TheUniversityofEdinburgh,Edinburgh,Scotland

8.Goethe-Universit?t,Frankfurt,Germany

9.FrankfurtSchoolofFinance&Management,Frankfurt,Germany

10.UniversiteitGent,Ghent,Belgium

11.Helsinginyliopisto(UniversityofHelsinki,Helsinki,Finland)

12.UniversiteitLeiden,Leiden,TheNetherlands

13.KULeuvenUniversity,Leuven,Belgium

14.UniversidadeCatólicaPortuguesa,Lisbon,Portugal

15.UniversidadedeLisboa,Lisbon,Portugal

16.UniverzevLjubljani(UniversityofLjubljana,Ljubljana,Slovenia)

17.QueenMaryUniversityofLondon,London,UnitedKingdom

18.UniversitéduLuxembourg,Luxembourg

19.UniversidadCarlosIIIdeMadrid,Madrid,Spain

20.UniversidadAutónomaMadrid,Madrid,Spain

21.UniversidadComplutensedeMadrid/CUNEF,Madrid,Spain

22.JohannesGutenbergUniversityMainz(JGU),Mainz,Germany

23.UniversityofMalta,Malta

24.UniversitàCattolicadelSacroCuore,Milan,Italy

25.Πανεπιστ?μιοΚ?πρου(UniversityofCyprus,Nicosia,Cyprus)

26.RadboudUniversiteit,Nijmegen,TheNetherlands

27.BINorwegianBusinessSchool,Oslo,Norway

28.UniversitéPanthéon-Sorbonne(Paris1),Paris,France

29.UniversitéPanthéon-Assas(Paris2),Paris,France

30.Πανεπιστ?μιοΠειραι??(UniversityofPiraeus,Athens,Greece)

31.StockholmsUniversitet(UniversityofStockholm,Stockholm,Sweden)

32.Tartuülikool(UniversityofTartu,Tartu,Estonia)

33.Universit?tWien,Wien,Austria

34.UniwersytetWroc?awski(UniversityofWroc?aw,Wroc?aw,Poland)

35.Universit?tZürich(UniversityofZürich,Zürich,Switzerland)

SupervisoryBoardoftheEuropeanBankingInstitute:

ThomasGstaedtner,PresidentoftheSupervisoryBoardoftheEuropeanBankingInstitute

EnricoLeone,ChancelloroftheEuropeanBankingInstitute

EBIWorkingPaperSeries

EBIWorkingPaperSeriesareaprojectoftheEuropeanBankingInstitutee.V..EBIWorkingPaperSeriesrepresentaselectionofacademicresearchesintotheareaofbankingregulation,bankingsupervisionandbankingingeneralwhichhavebeendraftedbyprofessorsandresearchersofEBIAcademicMembersandselectedbytheEditorialBoard.

EditorialBoard

Wolf-GeorgRinge(chair),ThierryBonneau,GuidoFerrarini,ChristosHadjiemmanuil,PeterMülbert,IgnacioTirado,EddyWymeersch

OS0TQ-S0S3EuropeanBankingInstitutee.V.,FrankfurtamMainGermany(“EBI”)TheEuropeanBankingInstituteisaeingetragenerVerein(G.^.)門uqGLCGLmguIg從(?SToLCGLmguC!^!ICoqG)LG8!2本GLGq!uELguFL門L本gmng!u'CGLmgu入.EBI!2guou-bLoL!本oL8gu!2g本!ouG2本gpI!2pGqGxcI門2!^GI入guqq!LGc本I入LoLcpgL!本gpIGb門Lbo2G2"8GmG!uuu?本S!8"從!本p!u本pGmGgu!u8oL"2本G門GLpG8u?u2本!8本GS從GcFG"!u本pGCGLmgu本gxgqm!u!2本Lg本!oucoqG("Vp8gpGuoLqu門u8").VIIL!8p本2LG2GL^Gq.

Electroniccopyavailableat:/abstract=4430642

NAVIGATINGTHELEGALLANDSCAPEOFAI-ENHANCEDBANKINGSUPERVISION:PROTECTINGEUFUNDAMENTALRIGHTSANDENSURINGGOODADMINISTRATION

AlessioAzzutti*

PedroMagalh?esBatistat

andWolf-GeorgRinge?

Abstract

Bankingsupervisorsworldwiderecognisethepressingneedtoharnessfrontiertechnologiessuchasartificialintelligence(AI),particularlymachinelearning(ML),toenhancetheirefficiencyandanalyticalcapabilities.TheEuropeanCentralBank(ECB)hassimilarlyacknowledgedtheopportunitiesofferedbysupervisorytechnology(SupTech)andestablishedadedicatedSuptechHub.However,theadoptionofautomatedtechnologiesinbankingsupervisionraisescomplexquestionsoflegality,transparency,andaccountability,particularlyfortheECB,asapublicinstitutionwithintheEU’sdemocraticorderfoundedontheruleoflaw.

ThisstudyinvestigateshowtheuseofAIsystemstoaugmentsupervisorydecision-makingmayimpactEUfundamentalrights,particularlytherighttogoodadministration.Tothisend,wefirstdefinethenotionofgoodadministrationinthecontextofbankingsupervision,andexplorewhatitentailsfortheECBfromlegalandethicalperspectives.WethenanalysethepotentialimplicationsofAI-enhancedbankingsupervisionforgoodadministrationandexaminehowthelattermayinformtheintegrationofAI/MLintosupervisoryprocessesandprocedures.

DrawinginspirationfromtheproposedEUAIAct,wedevelopanormativeframeworkforregulatingAIsystemsbasedonspecificriskstogoodadministrationassociatedwithdifferentapplications.Ourframeworkprioritisestransparency,auditabilityandaccountabilityrequirementstoensurethatfutureAI-drivenbankingsupervisionisalignedwiththeprinciplesofgoodadministration.Overall,thisstudycontributestothegrowingliteratureonthelegalimplicationsofAIandMLadoptionbyfinancialsupervisors,underscoringtheimportanceofabalancedapproachthatupholdsfundamentalrightswhileharnessingthebenefitsoftechnologicalprogress.

Keywords:

JELCodes:

artificialintelligence;machinelearning;bankingsupervision;ECB;EUadministrativelaw;goodadministration;fundamentalrights;judicialreview.

G18,G28,G38,K22,K42,O33,O38.

*ResearchAssociate,CentreforBanking&FinanceLaw,NationalUniversityofSingapore;PhDcandidateinLaw,UniversityofHamburg.

tLecturerinCommercial,Corporate,andBankingLaw,UniversityofLeeds;PhDcandidateinLaw,GoetheUniversityFrankfurt.

?ProfessorofLaw&FinanceandDirectoroftheInstituteofLaw&Economics,UniversityofHamburg;VisitingProfessor,StanfordLawSchool.

WearegratefultotheEuropeanCentralBankforawardingusascholarshipundertheECBLegalResearchProgramme2022,andfortheirkindsupportandassistancethroughouttheresearchprocess.WealsothanktheanonymousECBofficialswhoprovideduswithconstructivefeedbackonearlierversionsofthiswork.

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TABLEOFCONTENTS

I.INTRODUCTION 1

II.ARTIFICIALINTELLIGENCE,SUPTECH,ANDEUBANKINGSUPERVISION 4

A.SupTechmeetsBankingSupervision 4

B.AIinBankingSupervision:OpportunitiesandChallenges 10

III.GOODADMINISTRATIVEBEHAVIOURINEUBANKINGSUPERVISION 18

A.TheSupervisoryMandate:FromInstitutionalPowerstoDailyOperationsand

Decision-MakingProcedures 19

B.GoodAdministrationandSupervisoryProcedures 23

C.GoodAdministrationasaStandardforJudicialReview 28

D.GoodAdministrationasaBasisforSupervisoryLiability 32

IV.ENSURINGGOODADMINISTRATIONINAIBANKINGSUPERVISION 33

A.TheimplicationsofAIforGoodAdministration 34

B.EUSecondaryLawRequirementsonAIsystems 43

V.ANORMATIVEFRAMEWORKFORTRUSTWORTHYAIINBANKINGSUPERVISION 55

A.Risk-basedRegulationofAISystems 56

B.LegalRequirementsonTransparency 58

VI.CONCLUSION 62

ACKNOWLEDGEMENTS 64

i

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I.INTRODUCTION

ThedawnofArtificialIntelligence(AI),particularlyitssubfieldofMachineLearning(ML),inpublicserviceshasopenedupaworldoftransformativepossibilities,potentiallyrevolutionisingthewayinstitutionsoperate.1TheadvantagesofferedbyAIareindeedtoopromisingtoignore.AIcansignificantlyenhanceefficiencyandimproveservicequalitybystreamliningadministrativeprocesses,optimisingresourceuse,loweringcosts,andachievinggreateroutcomeaccuracy.2However,whileembracingcutting-edgetechnologiessuchasAI,publicinstitutionsmustalsograpplewiththeequallypressingchallengesoftransparency,accountability,eliminatingbias,discrimination,andlossofpublictrust.3Inanutshell,withgreatpowercomesgreatresponsibility.

Acknowledgingtheintricacyofstrikingabalancebetweenthesecontrastingaspects,alsobankingsupervisorsworldwideareprogressivelyendeavouringtoleveragethepotentialoffrontiertechnologieswhilecurtailingtherelatedlegal,operational,andreputationalrisks.4Whilebankingsupervisionhaslongreliedonhumansupervisors’professionalexperienceandtechnicalcompetence,cutting-edgeautomatedtechnologiestodayofferenormousadvantagesthatcannotbeoverlooked.Infact,thedigitalisationanddataficationofthebankingindustryhavemadetechnology-drivenandalgorithm-basedbankingsupervisionaconcretenecessity.5AIhasthepotentialtodeliverunprecedentedefficiencyandenhancedcognitivecapabilities,resultinginawealthofbenefits.Recognisingthis,theEuropeanCentralBank(ECB),initsfunctionastheEU’sbankingsupervisor6,hasembracedthepossibilitiesofferedbysupervisorytechnologies(SupTech)asacrucialelementofitsstrategicvision.Todriveinnovationandexplore

1ForanEUperspective,seeGianlucaMisuracaandColinvanNoordt,‘AIWatch–ArtificialIntelligenceinpublicservices:OverviewoftheuseandimpactofAIinpublicservicesintheEU’,EUR30255EN,(PublicationsOfficeoftheEuropeanUnion,2020),</10.2760/039619>accessed15April2023.

2ForaliteraturereviewoncurrenttrendsandpossiblefutureusesofAIinthepublicsector,seeWesleiGomesdeSousaandothers,‘Howandwhereisartificialintelligenceinthepublicsectorgoing?Aliteraturereviewandresearchagenda’(2019)36(4)GovernmentInformationQuarterly101392,<

/10.1016/j.giq.2019.07.004

>accessed15April2023.

3ForabriefoverviewofthechallengesposedbyAI,seeBerndWWirtz,JanCWeyerer,andBenjaminJSturm,‘TheDarkSidesofArtificialIntelligence:AnIntegratedAIGovernanceFrameworkforPublicAdministration’(2020)43(9)InternationalJournalofPublicAdministration818,<

/10.1080/01900692.2020.1749851

>accessed15April2023.

4Eg,DirkBroederandJermyPrenio,‘Innovativetechnologyinfinancialsupervision(suptech)-theexperienceofearlyusers’(2018)FSIInsightsonpolicyimplementationNo9,July2018,BankofInternationalSettlements,2-3and17-19,</fsi/publ/insights9.pdf>accessed15April2023.

5SeeDouglasWArnerandothers,‘TheFutureofData-DrivenFinanceandRegTech:LessonsfromEUBigBangII’(2020)25(2)StanfordJournalofLaw,Business&Finance245.

6TheSingleSupervisoryMechanism(SSM)istheECB’sbankingsupervisionarm.

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newsolutions,theECBhasestablishedadedicatedSuptechHub.ThefutureofEUbankingsupervisionisthereforeuponus,anditispoweredbyAI.Atthesametime,however,thecurrentjourneytowardsAI-enhancedbankingsupervisionmustalsocarefullyconsidertheimpactofsuchtechnologyoninstitutionaltransparencyandaccountability.7Indeed,asbankingsupervisorsturntoAItoenhancetheircapabilityinsafeguardingthestabilityofthefinancialsystem,severalcriticalquestionsloom,mainly:HowwilltheintegrationofautomatedtechnologyimpactthetransparencyandaccountabilityoftheECB—apublicinstitutionwithinademocraticorderbuiltontheruleoflaw?Hence,cantheprincipleof‘goodadministration’stillbeupheldwhileembracingautomationinbankingsupervision?

Notably,theconceptofgoodadministrationrepresentstheconstitutionalbackboneofgoodgovernanceinpublicservice.8Goodadministrationencompasseslegalprinciplesandvaluessuchastransparency,accountability,impartiality,andrespectforfundamentalrights,amongothers.9Italsoservesasaguidinglighttoensureethicalandhuman-centredbehaviourinpublicadministration.10Traditionally,goodadministrationismeanttoconstrainhumanofficials’behaviourtolimittheuseofarbitrarypoweranddiscretion,thuskeepingtheiractionsanddecisionswithinthelegalboundariesoftheirinstitutionalmandate.11But,withtheintegrationofAIintoadministrativeprocedures,thereisnowapressingneedtore-evaluatethelegalsignificanceandscopeapplicationofgoodadministrationgiventhechallengesraisedbydigitalisation.12Particularly,whileAIcanbringmorerationalityandfairnesstopublicservicesbylimiting,forinstance,human

7TheinterestandsupportforthisstudybytheECBthroughitsLegalResearchProgramme2022isaclearindicationofthegrowingrecognitionofthesepressingissuesattheinstitutionallevelandisundoubtedlyapositivestepforward.

8SeeCouncilofEurope,‘RecommendationCM/Rec(2007)7oftheCommitteeofMinisterstomemberstatesongoodadministration’[2007],</16807096b9>accessed15April2023.

9Tonote,theconceptsof‘goodadministration’and‘goodgovernance’areoftenusedinterchangeably.Onthescopeofgoodadministrationanditsroletopromotegoodgovernanceinpublicservices,seeThierryTanquerel,‘GoodAdministrationattheserviceofgoodgovernance:safeguardingindividualrightsandimplementingdemocraticdecisions’(2008)ReportpresentedattheEuropeanconference‘InPursuitofGoodAdministration’,Warsaw,29-30November2007,DA/ba/Conf(2007)6e,<https://www.uni-speyer.de/fileadmin/Lehrstuehle/Stelkens/Paneuropean_Principles/1DA-ba-Conf__2007__6_e_-

_T._Tanquerel.pdf>accessed15April2023.

10SeeJoanaMendes,‘GoodAdministrationinEULawandtheEuropeanCodeofGoodAdministrativeBehaviour’(2009)EUIWorkingPapers,Law09/2009,3-10,</1814/12101>accessed

15April2023.

11Eg,JuliPonce,‘GoodAdministrationandAdministrativeProcedures’(2005)12(2)IndianaJournalofGlobalLegalStudies551,554-556.

12See,eg,LenkaJan?ováandMeenakshiFernandes,‘Digitalisationandadministrativelaw:Europeanaddedvalueassessment’(2022)EuropeanParliamentaryResearchService,PE730.350,<https://www.europarl.europa.eu/RegData/etudes/STUD/2022/730350/EPRS_STU(2022)730350_EN.pdf

>accessed15April2022.

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biasesandunduediscretion,13itcanalsothreateninstitutionalaccountabilityifnotdeveloped,used,andmaintainedproperly,leadingtopotentialmaladministrationandabusesbyAI-poweredofficials.14

Allthesedevelopmentshaveundoubtedlyarousedgrowingscholarlyinterest.Ononehand,anemergingbodyofliteratureisinterestedinunderstandingthelegalimplicationsoftheconceptofgoodadministrationforindependentpublicauthoritiessuchasmoderncentralbanks.15Ontheotherhand,legalscholarsareinvestigatingthechallengesthatAIandautomateddecision-making(ADM)poseforpublicadministrations.16OuraimistobridgethesetwoareasbyexamininghowAIaffectsgoodadministrationinthecontextofEUprudentialbankingsupervision.Indoingso,thispaperisorganisedasfollows.InSectionII,wedelveintothecurrentstateofadoptionofSupTechtools,withaparticularemphasisonAI/ML-basedsolutions,bytheECBwiththeSingleSupervisoryMechanism(SSM).MovingtoSectionIII,weexaminetheconceptofgoodadministrationinEUpubliclawanddiscusstheethicalandlegalresponsibilitiesoftheECBtoupholdgoodadministrationstandardsinbankingsupervision.Buildingonthisfoundation,SectionIVconsiderstheimplicationsofAI-enhancedbankingsupervisionforgoodadministration.Itexamineshowthelatter,aswellasexistingandemergingEUpiecesoflegislationtargetingtheuseofAIbypublicinstitutions,mayinform—justifyingorlimiting—theintegrationofautomatedtechnologyintosupervisorypractices.Basedontheseinsights,SectionVproposesanormativeframeworkforregulatingAIsystemstoensuregoodadministrationinbankingsupervision.DrawinginspirationfromtheregulatoryapproachoftheEUAIAct17,ourframeworksuggestsregulatingAIsystemsbasedonthespecificriskstogoodadministrationassociatedwithdifferentapplications,focusingontransparencyandaccountabilityrequirements.Eventually,SectionVIconcludes.

13CaryCoglianese,‘Administrativelawintheautomatedstate’(2021)150(3)Daedalus104,110,<

/faculty_scholarship/2273

>accessed15April2023,discussinghowcontrolofhumandiscretioncanbeimprovedbyautomatingcertainadministrativetasks.

14MichèleFinck,‘AutomatedDecision-MakingandAdministrativeLaw’,inPeterCaneandothers(eds),TheOxfordHandbookofComparativeAdministrativeLaw(OUP2021)657,discussingonhowautomateddecisionsmightunderminetransparencyandaccountabilityofpublicinstitutions.

15See,eg,PeterConti-Brown,YairListokin,andNicholasRParrillo,‘TowardsanAdministrativeLawofCentralBanking’(2021)38(1)YaleJournalonRegulation1.

16See,eg,Finck(n

14)

,withmorecriticalcommentsonAIlackingtransparency;andCoglianese(n

13)

,withmoresupportivecommentsonAIlimitingdiscretion.

17EuropeanCommission,‘ProposalforaRegulationofTheEuropeanParliamentandoftheCouncillayingdownharmonisedrulesonArtificialIntelligence(ArtificialIntelligenceAct)andamendingcertainUnionlegislativeacts’,Brussels,21April2021,COM(2021)206final[hereinaftertheAIAct].

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II.ARTIFICIALINTELLIGENCE,SUPTECH,ANDEUBANKINGSUPERVISION

Supervisorytechnology,orSupTech,isproposedtorevolutionisethewayfinancialsupervisionisconducted.18Asakeyplayerinthisspace,theBankforInternationalSettlements(BIS)definesSupTechastheinnovativeuseoftechnologytosupportsupervision,facilitatingthetrendtowardsdigitizationofreportingandregulatoryprocesses.19AmongthevarioustechnologiesencompassedbySupTech,AIandparticularlyMLarewidelyconsideredgame-changers.20Bymakingavailablepowerfulanalyticaltools,SupTechhasthepotentialtomoveprudentialbankingsupervisionfromabackward-lookingtoapredictiveprocess.21Atthesametime,thesameBISacknowledgesthatsuchtoolsbringunchartedlegalandethicalissuesthatcannotbeignored.22Inthissection,weexploretheexcitingpotentialanddauntingrisksassociatedwithAIinSupTechinlightofthetechno-legallandscapeofthistransformativetechnology.

A.SupTechmeetsBankingSupervision

Thedynamicandincreasinglycomplexnatureofthebankingsystem,alongwithexplodinglevelsofregulatoryrequirements,poseschallengestotheeffectivenessofbankingsupervision.23Althoughinnovativetechnologieshaveenabledtheemergenceofnewbusinessandorganisationalmodelsinthebankingindustry,theyarealsoproposedtotransformthewayregulatorycomplianceandsupervisoryoversightactivitiesareconducted.24Inthislandscape,anewgameof‘cat-and-mouse’hasemergedbetweenfinancialsupervisorsandprivateorganizations,withthelatterleadingthechargeinadoptingnewtechnologies.25Intheremainderofthissection,wedelveintothecomplex

18Theterm‘SupTech’enteredthelexiconofthefinancialindustryinMarch2017whenMrRaviMenon,theManagingDirectoroftheMonetaryAuthorityofSingapore(MAS),introducedthetermtothepublic.SeeRaviMenon,‘FinancialRegulation–TheForwardAgenda’(2017)KeynoteAddressattheAustralianSecuritiesandInvestmentsCommission(ASIC)AnnualForum2017on20March2027,<

.sg/news/speeches/2017/financial-regulation

>accessed15April2023.

19BroedersandPrenio(n

4)

1.

20See,eg,OrganizationforEconomicCo-operationandDevelopment(OECD),‘OECDBusinessandFinanceOutlook2021’:AIinBusinessandFinance’(2021)121-140,<

/10.1787/ba682899-en

>accessed15April2023.

21BroedersandPrenio(n

4)

3.

22ibid.

23SeeDanAwreyandKathrynJudge,‘Whyfinancialregulationkeepsfallingshort’(2020)61BostonCollegeLawReview2295.

24See,eg,DouglasWArner,JanosBarberis,andRossPBuckley,‘TheEvolutionofFintech:Anewpost-crisisparadigm’(2016)47(4)GeorgetownJournalofInternationalLaw1271.

25Foranaccountofthechallengesthatfinancialregulatorsfaceincatchingupwithmarketplayersinthetechnologyendowment,fromacapitalmarketsperspective,seeAlessioAzzutti,‘TheAlgorithmicFutureofEUMarketConductSupervision:APreliminaryCheck’,inLukasB?ffelandJonasSchürger(eds),

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andever-evolvingrelationshipbetweenRegTechandSupTech,alongwiththechallengesandopportunitiesarisingfromthisdynamicinteraction,beforeturningtohowtheECBisexploringSupTech.

1.The‘cat-and-mouse’gamebetweenRegTechandSupTech

Forcreditinstitutions,frontiertechnologieslikeAIofferpowerfultoolstoachievegreateroperationalefficiencywhilealsoassistingtheminriskmanagementandcompliancefunctions.26Theterm‘regulatorytechnology’,orRegTech,referstotheuseoftechnologytohelpfinancialinstitutionscomplywithregulatoryrequirementsmoreefficientlyandeffectively.27Itinvolvesarangeofinnovativetechnologyandapplications—i.e.,AI/ML,BigData,cloud-computing,distributed-ledger-technology,block-chain,Internet-of-Things,etc.—toautomateandstreamlinecomplianceprocesses,monitorregulatorychanges,safeguardregulatorydatagovernance,andreducetheriskofnon-compliance.28Overall,RegTechsolutionsaimtosavetimeandcostsassociatedwithregulatorycompliance,whilealsoimprovingaccuracyandreducingtheriskofhumanerrorandotherthreats.29Atthesametime,duetoagrowingavailabilityofregulatorydata—ofdifferentformatandmoregranularquality—alsofinancialsupervisorsseeastrongpotentialinAIsystemstoenhancetheirsupervisorycapability,decision-makingaccuracy,andbettermakeuseoftheirlimitedresources.30

Digitalisation,Sustainability,andtheBankingandCapitalMarketsUnion:ThoughtsonCurrentIssuesofEUFinancialRegulation(PalgraveMacmillan2023),Chapter2,82.

26TheuseofAI-basedtoolsinthebankingindustryhasledtoaremarkablebreakthroughinautomationanduncoveringpreviouslyunknownpatternsandrelationshipsinBigData,bothstructuredandunstructured.Today,AI-basedanalyticaltoolsfoundwidespreadapplicationinanumberofbusinesstasks,includingimprovingcreditscoring,frauddetection,creditanalysis,customerprofiling,claimassessmentininsurance,streamliningbankingoperationssuchascapitaloptimisationandriskmanagement,aswellasenhancingtradingandportfoliomanagement.SeeFinancialStabilityBoard(FSB),‘Artificialintelligenceandmachinelearninginfinancialservices:Marketdevelopmentsandfinancialstabilityimplications’(2017)7-15,</wp-content/uploads/P011117.pdf>accessed15April2023.

27DouglasWArner,JanosBarberis,andRossPBuckley,‘FinTech,RegTech,andthereconceptualizationoffinancialregulation’(2016)37NorthwesternJournalofInternationalLaw&Business371.

28See,eg,BennyFirmansyahandArryAkhmadArman,‘ASystematicLiteratureReviewofRegTech:Technologies,Characteristics,andArchitectures’(2022)2022InternationalConferenceonInformationTechnologySystemsandInnovation(ICITSI),Bandung,Indonesia,2022,310,<

/abstract/document/9970830

>accessed15April2023;andMoinakMaitiandUttamGhosh.‘NextGenerationInternetofThingsinFinTechEcosystem’(2023)10(3)IEEEInternetofThingsJournal2104,</document/9367273>accessed15April2023.

29See,eg,AndreaMiglionico,‘AutomatedRegulationandSupervision:TheImpactofRegTechonBankingCompliance’(2020)31(4)EuropeanBusinessLawReview641.

30See,eg,PedroBatistaMagalh?esandWolf-GeorgRinge,‘DynamisminFinancialMarketRegulation:HarnessingRegulatoryandSupervisoryTechnologies’(2021)4(2)StanfordJournalofBlockchainLaw&Policy203,210-212.

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Theever-increasingregulatorydemandsonfinancialfirmshavenecessitatedinvestmentsinbetterdatamanagementcapabilitiestocomplywithsupervisoryexpectations.Asaresult,financialsupervisorshavehadtodevelopnewdatamanagementframeworkscapableofhandlingtheinfluxofdata,withaviewatminimisingcompliancecostsandfacilitatingsupervisionthroughinnovation.31Thistrendcanbeobserved,forinstance,inmulti-stakeholderinitiativessuchasTechSprintsandSupTechLabssupportedbyfinancialsupervisorsandcentralbanks.32Suchinnovationplatformsindeedprovideaspaceforfinancialinstitutionsandregulatorstocollaborateandexplorethemosteffectivewaysofimplementingnewtechnologies,suchasAIandML,toimprovefinanci