Mon | Sep 20, 2021
As supervision deepens

BOJ upgrading bank-watch IT platform

Published:Wednesday | March 10, 2021 | 12:17 AMHuntley Medley/Associate Business Editor
Bank of Jamaica Governor Richard Byles.
Bank of Jamaica Governor Richard Byles.

The creation of a new integrated IT platform for the safe sharing of bank supervision information between the Bank of Jamaica, BOJ, and the deposit-takers that it regulates will get under way later this year. But in the meantime, the central bank...

The creation of a new integrated IT platform for the safe sharing of bank supervision information between the Bank of Jamaica, BOJ, and the deposit-takers that it regulates will get under way later this year.

But in the meantime, the central bank is giving the assurance that the existing data-sharing system is robust enough to effectively police the financial system.

These developments come as the central bank moves to implement more rigorous risk-based assessment of financial institutions, amid the national and global economic uncertainties thrown up by the COVID-19 pandemic.

“The introduction of the risk-based supervisory methodology means the monitoring of new and more frequent data sets, which demands the enhancement of technology and business processes, to ensure effective supervision of the financial sector,” the central bank said via email in response to Financial Gleaner queries.

“Accordingly, the bank continues to improve this competency by upgrading, and where necessary, developing and implementing platforms to support efficient and safe mechanisms to manage information between the bank and its licensees in support of effective supervision,” BOJ said.

In the deposit-taking sector, BOJ oversees commercial banks, building societies and merchant banks – currently totalling 11 institutions or DTIs – and is in the process of merging around 26 credit unions into its oversight portfolio.

The banking institutions held $1.2 trillion of deposits as at last December.

BOJ said that in order to facilitate enhanced risk monitoring and supervisory reporting within the financial sector, the tripartite Financial Regulatory Committee has committed to the implementation of a centralised data collection and information sharing platform to be used by all three regulators.

The committee comprises the BOJ; the Financial Services Commission, FSC, which regulates securities dealers, investment firms, insurance companies and pension funds; and the Jamaica Deposit Insurance Corporation, JDIC, which manages a deposit insurance fund, currently valued at over $27 billion, that secures depositors’ money. The latter agency has powers for resolving liquidity problems detected in DTIs that are members of the insurance scheme, through measures such as mergers and acquisitions, winding up and outright sale.

“The platform will allow for greater and more efficient data-sharing, regulatory collaboration and will facilitate a more effective consolidated supervision process,” the BOJ said, adding that a high-level steering committee made up of senior officers from all three agencies, which are referred to as the financial system safety net partners, has been put in place with work on the project scheduled to commence later this year.

Industry sources say the efforts by the BOJ, FSC and JDIC to strengthen their IT platforms for supervisory data-sharing and regulatory collaboration includes arrangements for cost-sharing so as to minimise the financial and administrative impact of the increased regulatory requirements on financial institutions.

The new system is intended to replace the existing prudential data collection, analysis, and reporting platform, called JamFIRMS, that the BOJ says now supports the secure digital transfer of prudential data between the central bank and deposit-takers.

The new IT platform, to be developed and managed by the BOJ, will be housed at the central bank. The cost of the upgrade was not ascertained.

The BOJ said that while the new system is being worked on, it has established a data-sharing platform that can be accessed by itself and the FSC to facilitate the sharing of prudential information for banking groups with entities that are both BOJ and FSC licensees.

“Since 2018, the bank has been systematically strengthening this platform, introduced in 2016, to provide greater and more efficient services to stakeholders. During the current year, the bank will implement an expansion to the JamFIRMS platform that will automate the collection of data and information for its Fit & Proper and Licensing & Approvals processes,” BOJ said.

The central bank added that, for the past three years in particular, it has been on-boarding additional supervisory staff to enhance the technical team.

“Subsequently, efforts remain focused on providing these resources with continued training and professional development opportunities to enhance their technical skills for the successful discharge of the risk-based supervision mandate,” said BOJ. “The bank also continues its efforts to acquire the specialised skills necessary to evaluate emerging risk exposures of licensees, for example, in the area of information technology,” it said.