Bank of Lithuania presents solution to streamline reporting procedures
Today in Vilnius, at the GovTech Lab event on regulatory innovations, the Bank of Lithuania, together with Columbus Lietuva and Peekdata, introduced a RegTech solution prototype which will automate reporting procedures and reduce the administrative burden for financial market participants. Moreover, the supervisory authority will be provided with an entirely new level of monitoring and analysis opportunities.
“This solution is revolutionary in terms of its efficiency and accuracy. During the testing period, we used reports for anti-money laundering purposes, yet the range of its application is very wide,” said Ramūnas Baravykas, Head of RegTech and Advisor to the Director of the Supervision Service of the Bank of Lithuania. He also added that the innovation would boost the attractiveness of Lithuania’s financial sector, as new participants would be allowed to enter the market more quickly and smoothly.
Although the prototype was tested with electronic money institutions, it could automate reporting procedures for many other financial market participants. Currently, electronic money institutions alone submit up to 20 different reports, while banks, credit unions and other market participants are required to regularly provide the Bank of Lithuania with even more reports for statistical and supervisory purposes, which is time consuming and requires considerable resources.
Upon adopting this solution, the Bank of Lithuania could automatically receive detailed preliminary (operational) data and analyse them in various aspects, while financial market participants would no longer need to worry whether precise and detailed data, which complies with legal requirements, is submitted in a timely manner.
This innovation is the fruit of the Lithuanian IT companies Columbus Lietuva and Peekdata. The solution will use application programming interface (API) software – a key element of open banking that has helped increase competition in the payments market as well as introduce new and attractive services to consumers and businesses. The solution prototype was tested by the Lithuanian electronic money institution ConnectPay together with Interpaylink, and the IT solutions provider Paysolut. The solution was presented during the GovTechLab event.
“The proposed solution does not require changing information systems used by financial institutions. All you need is to install an extra API module which would automatically collect the needed data from the institution’s databases and submit them in a standardised format to the data reception module of the supervisory authority,” said Dovydas Zinkevičius, Head of Columbus Lietuva. According to him, installation of the necessary modules at financial institutions would only take a few weeks.
Given that a suitable RegTech solution prototype has been created, the Bank of Lithuania will take under discussion the extent of its use, also drawing in other national institutions and market participants. Transition to the modern reporting method will require amending existing legislation.
GovTech Lab seeks to adopt innovative tech solutions for public sector needs. Any public sector institution is able to identify challenges that startups, the private sector and the general public may provide solutions for. The initiative of Kurk Lietuvai was launched in March 2019, while at the end of the year it was named Best European Policy Innovation. Currently, the project is being implemented by the Agency for Science, Innovation and Technology.