Digitalisation of Financial Supervision with Supervisory Technology (SupTech)

Abstract

In this article, we discuss and analyse the main components of a digital financial supervisory system with supervisory technology (SupTech). This work offers a new SupTech definition and configures the digital pillars of a financial supervisory system. We contribute to the TECHs in Finance (FinTech, RegTech, SupTech) literature with two new concepts: “prudential supervisory disclosure” and “sustainable finance technology”, or SuFTech. This work also touches on real TECHs in Finance cases from several countries. We find that the May 6, 2010 market crash at the U.S. financial markets, one of the biggest FinTech crises, addresses the importance of having a well-functioning SupTech system. The case also points out that even a leading technology-producing country or a developed country faces unprecedented FinTech crashes or crises unless the country’s financial supervisors keep pace with technology and develop a well-functioning SupTech system.