Fourteen tech companies including Fiserv and Palantir are moving forward in a “hackathon” competition launched by a U.S. banking regulator to develop faster data collection and reporting methods for financial institutions.
The U.S. Federal Deposit Insurance Corporation said Thursday that it had narrowed down the competition to 14 firms to modernize the reporting process. The agency is aiming for tighter briefing turnarounds and updated methods as part of the project.
Contracts were also awarded to Accenture Federal Services, ACTUS Financial Research Foundation, Amberoon, Donnelley Financial, DSQuorum, Fed Reporter, Fidelity Information Services, Neocova Corporation, Novantas, PeerIQ, S&P Global Market Intelligence and TrueTandem.
The FDIC kicked off the tech sprint, known as the Rapid Prototyping Competition, in June to replace and modernize the system it has used for the past 150 years and potentially eliminate traditional quarterly U.S. bank filings.
The competition began as an “extended hackathon” with at least 20 U.S. technology firms participating. The companies were not named in June, but 14 were revealed on Thursday to be moving on to the next phase of the contest.
The group will continue developing “an innovative new approach to financial reporting, particularly for community banks,” the FDIC said.
In July, FDIC Chairman Jelena McWilliams wrote in a column that she had been working to modernize the bank reporting process since being named to her post in 2018, “because there has to be a better way.”
The ideal new reporting system would better equip regulators to detect signs of risk and to take early actions to protect consumers, banks, the financial system and the economy, the FDIC said.
McWilliams said the primary reason for the update is to disseminate important information more quickly. Quarterly financial results for the vast majority of U.S. banks typically do not come in until about 120 days after the quarter began, which is a four-month information gap that “is particularly acute at community banks,” she noted.
The FDIC already uses technology to fill the gaps at the country’s largest banks, so the system overhaul will mostly help smaller banks.
“Financial conditions across all community banks can be key indicators of strain in the economy, growing stress across the financial system and emerging risk at individual institutions,” McWilliams said.
“Targeted data sets from community banks, more frequently available and more granular than current reporting, could reduce the need for cumbersome quarterly reporting. This modernized and automated data system would improve the ability of supervisors to identify bank-specific and systemwide risks sooner and more efficiently, while reducing the compliance burdens on individual institutions,” she said.
In the contest thus far, the participating tech firms have been asked to rapidly produce working prototypes of their new technologies over several competitive phases. In the next phase, the 14 finalists will demonstrate their prototypes within 70 days.
The FDIC has stressed that community banks will not be mandated to adopt any new system, and that traditional quarterly call reports will still be the norm as the tech competition progresses.
“This transformation will not happen overnight — it may not even happen during my FDIC tenure. But it is critical for our banking system to begin the process now,” McWilliams said.