Bureau considering ‘tech sprints’ for finding ways to ease reg compliance for HMDA, more

A “call for ideas” was issued Friday by the federal agency charged with consumer financial protection on how a process called “tech sprints” could be used to encourage regulatory innovation and develop viable solutions to regulatory compliance challenges in areas such as Home Mortgage Disclosure Act (HMDA) data submission, processing, and publication.

In a request for information posted via the agency’s website, and with a comment deadline of Nov. 8, the Consumer Financial Protection Bureau (CFPB) points to its federal statutory charge to “regulatory identify and address outdated, unnecessary or unduly burden regulations in order to reduce unwarranted regulatory burdens.”

To illustrate ways it has carried out this mandate, the bureau noted, among other things, its own creation of “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). It also pointed to the bureau’s use of open source “interactive regulations”; its use of machine learning to analyze and interpret consumer complaints it receives; and the prioritizing by bureau Director Kathleen Kraninger, also current FFIEC chair, of the issue of data transfer from financial institutions to regulators.

The bureau notice says tech sprints, which task diverse working groups (of regulators, industry, academia) with developing solutions to specified issues over a period of days, have been used successfully in the United Kingdom by regulators and by U.S. agencies as well (specifically, the Census Bureau and Department of Health and Human Services).

In Friday’s notice, the bureau invited ideas on how it can use tech sprints to advance regulatory innovation and compliance. Specifically, it says it 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; and
  • to reduce unwarranted regulatory compliance burdens.

According to the notice, information provided will help the CFPB 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,” it states.

Specific comments are sought on, among other things:

  • 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 CFPB 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?

Request for information regarding Tech Sprints (from Federal Register)