[Federal Register Volume 84, Number 181 (Wednesday, September 18, 2019)]
[Notices]
[Pages 49099-49100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20201]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
[Docket No. CFPB-2019-0048]
Request for Information Regarding Tech Sprints
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Notice and request for information.
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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) seeks
comments and information to identify opportunities to utilize Tech
Sprints as a means to encourage regulatory innovation and collaborate
with stakeholders in developing viable solutions to regulatory
compliance challenges.
DATES: Comments must be received by November 8, 2019.
ADDRESSES: You may submit responsive information and other comments,
identified by Docket No. CFPB-2019-0048, by any of the following
methods:
Electronic: Go to http://www.regulations.gov. Follow the
instructions for submitting comments.
Email: [email protected]. Include Docket No.
CFPB-2019-0048 in the subject line of the message.
Mail: Comment Intake, Office of the Executive Secretary,
Bureau of Consumer Financial Protection, 1700 G Street NW, Washington,
DC 20552.
Instructions: The Bureau encourages the early submission of
comments. All submissions must include the document title and docket
number. Because paper mail in the Washington, DC area and at the Bureau
is subject to delay, commenters are encouraged to submit comments
electronically. In general, all comments received will be posted
without change to http://www.regulations.gov. In addition, comments
will be available for public inspection and copying at 1700 G St. NW,
Washington, DC 20552, on official business days between the hours of 10
a.m. and 5 p.m. eastern standard time. You can make an appointment to
inspect the documents by telephoning 202-435-9169.
All submissions in response to this request for information,
including attachments and other supporting materials, will become part
of the public record and subject to public disclosure. Sensitive
personal information, such as account numbers or Social Security
numbers, or names of other individuals, should not be included.
Submissions will not be edited to remove any identifying or contact
information.
FOR FURTHER INFORMATION CONTACT: For general inquiries and submission
process questions, please call Tim Lambert at (202) 435-7523. If you
require this document in an alternative electronic format, please
contact [email protected].
SUPPLEMENTARY INFORMATION: The Bureau has a statutory responsibility to
regularly identify and address outdated, unnecessary or unduly
burdensome regulations in order to reduce unwarranted regulatory
burdens. 12 U.S.C. 5511(b)(3). Technology plays an increasingly
critical role in financial regulatory compliance. For financial
institutions, technology is used to assess and address compliance risk.
Government regulators use technology to help evaluate market risks and
effectively deploy compliance and enforcement resources. Interactions
between regulators and financial institutions are facilitated by
technology in areas such as regulatory reporting, and improvements in
supervision technology can help to modernize the examination process.
Finally, the evolution of technologies used in credit markets, while
potentially increasing access to responsible credit, challenge
financial institutions and regulators to properly identify and control
risk.
In all these areas, regulators are exploring how they can
effectively engage with financial technology to help keep up with the
rapidly accelerating pace of innovation. The integration of technology
and regulatory compliance has the potential to harness technological
advances to reduce burden, improve results, and create greater
efficiencies across financial markets that can ultimately reduce
consumer costs. The expertise of vendors, regulated entities, academia,
and community groups can help regulators understand the benefits and
risks of such technology.
Technological Innovation at the Bureau
Among the objectives established by Congress for the Bureau is to
facilitate innovation. 12 U.S.C. 5511(b)(5). The Bureau has worked to
achieve this goal not only in its work with external stakeholders but
also in its own operations. In developing software, the Bureau has
adopted open source practices, permitting industry to use its shared
code, build directly to its specifications, and suggest improvements
and enhancements to Bureau systems. In regulatory reporting, the Bureau
created an entirely cloud-based platform for the submission,
processing, and publication of Home Mortgage Disclosure Act (HMDA) data
by the Federal Financial Institutions Examination Council (FFIEC), with
a web-based filing application replacing the former email, fax, paper,
and electronic-file based system. The Bureau developed the new HMDA
Platform (https://ffiec.cfpb.gov) through extensive consultations with
HMDA users with the goal of minimizing burden and cost for both
regulated entities and government while satisfying all legal
requirements and increasing overall efficiencies. The new system,
developed as open source (https://github.com/cfpb/hmda-platform), was
guided by a philosophy of continuous improvement to avoid rapidly
outdated software, using a container-based (https://hub.docker.com/u/hmda) microservices approach and modern cloud architectures. The front-
end design incorporated user testing to refine and improve the data
filing as well as publication capabilities. Regulatory file submissions
are processed through the HMDA Platform Rule Engine, a translation of
regulation text to program code, and users are presented with success
and error results of HMDA ``edits'' during the annual filing process.
First deployed in 2018, the HMDA Platform requires just one interaction
with the FFIEC to complete required data filing, replacing an iterative
process that generally lasted weeks. Additionally, the HMDA Platform
allows users to produce and export custom data sets rather than relying
on numerous static reports that few previously accessed. To enable
external software developers to access some of the key services offered
by the HMDA Platform, the Bureau publishes Application Programming
Interfaces (APIs) that can be integrated into external websites,
analytical tools, and industry software.
The Bureau has innovated in other areas as well. Bureau regulations
are available in the form of open source Interactive Regulations,
making legal requirements easier to read, navigate and understand. The
Bureau uses machine learning to analyze and interpret consumer
complaints it receives in order to quickly identify new and emerging
risks in the consumer
[[Page 49100]]
marketplace. In addition, upon assuming the chairmanship of the FFIEC
earlier this year, the Bureau's Director identified as a priority the
issue of data transfer from financial institutions to regulators, and
is working with the other FFIEC agencies to identify opportunities for
improvement and burden reduction.
To guide its efforts to facilitate innovation, the Bureau seeks to
strengthen its open collaboration with stakeholders in order to work
together in developing solutions to shared problems. It looks to foster
an approach that inquires how technology might reshape compliance,
speed effective interaction between regulators and financial
institutions, and decrease cost and administrative burden.
Tech Sprints
The Bureau is exploring Tech Sprints as a model for collaborative
innovation. Used successfully by the Financial Conduct Authority (FCA)
in the United Kingdom, Tech Sprints gather regulators, technologists,
financial institutions, and subject matter experts from key
stakeholders for several days to work together to develop innovative
solutions to clearly-identified challenges. Small teams include
participants from both the regulator and a diversity of entities to
ensure the inclusion of regulatory, industry, and technology
perspectives. The regulator assigns a specific regulatory compliance or
market problem to each team and challenges the teams to solve or
mitigate the problem using modern technologies and approaches. The
teams then work for several days to produce actionable ideas, write
computer code, and present their solutions. On the final day, each team
presents to an independent panel of judges that selects winners. The
most promising ideas can then be further developed either in
collaboration with the regulator or by external parties. The FCA has
organized seven Tech Sprints since 2016 and has started a pilot project
on digital regulatory reporting built on ideas developed in a Tech
Sprint.
In the United States, Tech Sprints have been used in a variety of
ways, including by the U.S. Census Bureau (Census Bureau) and the U.S.
Department of Health and Human Services (HHS). At the Census Bureau,
The Opportunity Project (TOP) matched tech companies, universities,
government and communities together to translate U.S. government open
data into useful digital products over the course of a 12-week sprint.
At the end of the sprint, products launched and often moved on to full
development as tools for the public. HHS, along with Presidential
Innovation Fellows, organized health Tech Sprints known as TOP Health
focused on healthcare-related challenges that used artificial
intelligence (AI) and machine learning techniques with Federal data.
Call for Ideas
The Bureau seeks ideas on how it can use Tech Sprints to advance
regulatory innovation and compliance. Specifically, the Bureau is
interested in using Tech Sprints:
To leverage cloud solutions, machine automated compliance
checks that allow for independent validation by regulators, and other
developments that may reduce or modify the need for regulated entities
to transfer data to the Bureau.
To continue to innovate HMDA data submission, processing,
and publication to help ease burden, increase flexibility, and resolve
compliance challenges, while satisfying all legal requirements.
To identify new technologies and approaches that can be
used by the Bureau to provide more cost-effective oversight of
supervised entities, effective evaluation of compliance and risk, and
closer interface with financial industry systems and technology that
may include the use, for example, of analytical tools in the review of
mortgage origination data.
To explore other technological approaches to robust and
secure data access or exchange between regulated entities and the
Bureau.
To reduce unwarranted regulatory compliance burdens.
The information provided will help the Bureau identify how
stakeholders can work together to create a regulatory environment (1)
which allows innovation to flourish, is flexible, efficient and
effective; (2) where new and/or emerging risks can be identified and
managed effectively; and (3) where consumers have the appropriate level
of protection and suitable access to the benefits of technological
advancement. The Bureau is seeking to collaborate with stakeholders in
developing solutions to regulatory compliance challenges, and is not
seeking to endorse a particular product or service.
In particular, the Bureau asks commenters to respond to the
following questions:
What regulatory compliance issues, problems, procedures,
or requirements could benefit from innovation through a Bureau Tech
Sprint?
What financial technology or other advances hold the most
promise for helping modernize regulatory compliance?
What other suggestions do you have for how the Bureau
could plan, organize, and conduct a Tech Sprint, including its
participants, duration, and location?
Other than organizing Tech Sprints, what else might the
Bureau do to encourage innovation in financial products and services?
For example, could advances be encouraged by changes to certain Bureau
rules or policies?
Are there any concerns that might discourage participation
in Tech Sprints that the Bureau could address?
Authority: 12 U.S.C. 5511(c).
Dated: September 12, 2019.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2019-20201 Filed 9-17-19; 8:45 am]
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