Findings

Congress finds the following: (1)Banking regulators continue to examine and monitor depository institutions without access to real-time information. (2)Bureaucracy and risk surrounding technology procurement presents a difficult challenge for updating supervisory technology. (3)To ensure that prudential supervision is effective and sustainable in the digital age, agencies must leverage new technologies to allow for the financial monitoring necessary to preserve a safe and sound banking system. (4)New technology tools are also necessary in order for agencies to effectively fulfill mandates other than prudential supervision, including their mandates to assure consumer protection and monitor Bank Secrecy Act compliance. (5)Agencies’ reliance on outdated technology creates vulnerabilities for the financial system, causing— (A)difficulties in collecting, compiling, and analyzing relevant information about risks and noncompliance at supervised firms; (B)reliance on information that is inaccurate, incomplete, or not timely; reliance on limited and outdated tools for data analysis; (C)difficulties in using data to identify risk trends; (D)difficulty in producing accurate and timely reports; (E)inadequacy of cybersecurity safeguards; and (F)failure to detect illegal activities. (6)The rapid expansion of financial firms’ use of artificial intelligence is generating opportunities to improve the financial system, making it essential that agencies be equipped with the technology and skills needed to analyze these opportunities and potential risks. (7)While agencies assess their supervisory capabilities on an ongoing basis, it is imperative that there be a unified goal to enhancing supervisory technologies that ensures effective and sustainable oversight in the digital age.

Technological vulnerabilities and procurement practices assessment

(a)

In general

(1)

Technological vulnerabilities assessment

Each covered agency shall, not later than 180 days after the date of the enactment of this section, assess how its existing technological systems prevent an agency from conducting real-time supervisory assessments over entities which the covered agency has supervisory authority, including the effects stemming from the agency’s— (A)core information technology infrastructure; (B)technology used to supervise entities, including supervisory technology tools; and (C)technology for monitoring general market risks using reported data and external data. (2)

Procurement practices assessment

Each covered agency shall, not later than 180 days after the date of the enactment of this section, assess the procurement rules and protocols adhered to by such covered agency when such covered agency acquires or develops new technological systems and identify any challenges created by such procurement rules and protocols, including the impact such rules or protocols have on the ability of the covered agency to test new technological systems. (b)

Report

Not later than 180 days after the completion of the assessments set forth in this section, and every 5 years thereafter, the covered agencies shall coordinate and submit to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a report that includes the following with respect to each covered agency— (1)a general overview of hardware and software used for informational gathering during supervision activities, including products purchased from technology vendors and products developed by the covered agency or contractors; (2)a description of the procurement practices and protocols of the covered agency, including a description of— (A)whether such processes are voluntarily adhered to or mandated; and (B)any challenges resulting from such practices and protocols that have hindered the ability of the covered agency to obtain new technology; (3)a general overview of the agency’s workforce engaged primarily in technology development within the covered agency, including— (A)an overview of the ability of the covered agency to recruit and retain appropriate technology experts; and (B)a description of the degree to which the covered agency relies on outside contractors to design technology and perform technology-related tasks; (4)a description of the processes used by the covered agency to obtain information from entities supervised by the covered agency and general information about market trends and risks; (5)a description of the ways in which the covered agency shares information with other covered agencies; (6)an evaluation of the level of ease or difficulty experienced by the covered agency when— (A)sharing data with other government agencies; and (B)collecting data from entities supervised by the covered agency; and (7)a description of any plans the covered agency has with respect to how the covered agency will implement future upgrades to the technology used by the covered agency to supervise entities supervised by the covered agency, including— (A)a general description of any planned upgrades; (B)the anticipated timeline of any planned upgrades; (C)the costs of any planned upgrades; (D)any concerns about access to needed resources; (E)intended efforts for hiring and training individuals as part of any technological upgrades; (F)any aspects of any plan that should be addressed on an interagency basis; and (G)any anticipated challenges and solutions associated with entities supervised by the agency adapting to new reporting requirements, including the needs and plans for supervised entities adaptation to new reporting requirements, including estimates of transition costs and potential cost reductions over time. (c)

Covered agency defined

The term covered agency means the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Consumer Financial Protection Bureau and the National Credit Union Administration.