Justification Memo - FDiTech Lab Office Hours

Federal Deposit Insurance Corporation

550 17th Street NW, Washington, D.C. 20429-9990

550 17th Street NW, Washington, D.C. 20429-9990

April 15, 2021

 

Memorandum to: William E. Bestani

Policy Analyst

Office of Information and Regulatory Affairs

Office of Management and Budget

Executive Office of the President                            

                                    

From: Manny Cabeza

Regulatory Counsel

Assessments and Legislation Group

Legal Division

Federal Deposit Insurance Corporation            

RE: Federal Deposit Insurance Corporation (FDIC) FDiTech lab public Office Hours

The FDIC is requesting approval of a generic qualitative survey under the FDIC’s currently approved “Information Collection for Qualitative Research” (OMB Control Number 3064-0198) in connection with the FDiTech lab’s public Office Hours, to be held initially during the second quarter of 2021, and then once each quarter thereafter through the fourth quarter of 2023

The FDIC recognizes the important role technological innovations are playing in transforming the business of banking and enabling regulators to conduct efficient and effective oversight. These innovations are widespread, including: (1) ways that ease the burden of regulatory compliance (both on the individual insured depository institution side as well as within FDIC); (2) change in the nature of risk to the overall system (understanding current risks, anticipating current or future risks); and (3) digital technologies that change the nature of interactions between banks and their customers (both consumers and commercial).

The FDIC’s FDiTech lab is an office in the FDIC that seeks to evaluate and promote the adoption of innovative and transformative technologies in the financial services sector to improve the efficiency, effectiveness, and stability of U.S. banking operations, services, and products. FDiTech seeks to help increase the velocity of transformation of banking by encouraging the adoption of technological innovations through increased collaboration with market participants.

This survey is consistent with the FDIC’s commitment to increase transparency, improve efficiency, support innovation, and provide opportunities for public feedback on issues affecting FDIC-supervised and –insured institutions, and their customers.

The FDIC and FDiTech plans to host Office Hours as a means to obtain views from a range of stakeholders regarding current and evolving technological innovations surrounding the business of banking. Office Hours are one-on-one meetings between stakeholders and FDIC officials to discuss ways to promote adoption of innovative and transformative technologies in the financial services sector, and improving the efficiency, effectiveness, and stability of U.S. banking operations, services, and products to better serve consumers and support access to financial institutions. Office Hours allow stakeholders and innovators to engage directly with FDIC staff. There will be a limited number of available Office Hour meetings each quarter; approximately fifteen. Each meeting will last no longer than one hour.

Interested parties wishing to participate in the Office Hours will submit a simple application request by a determined deadline, and provide information on why they are interested in meeting with the FDIC. The FDIC will then schedule specific meeting times and arrangements with selected applicants based on the information submitted by them, their relationship to the areas of interest, and staff availability.

The FDIC and FDiTech will use information from the Office Hours to learn more about ongoing or planned technological innovations for banks, potential benefits and risks of technological innovations, legal, regulatory or other challenges to their adoption, and opportunities with respect to technological innovations that help banks meet their regulatory responsibilities.

Initially the survey will be deployed one time during the second quarter of 2021, and the FDIC and FDiTech are interested in the attendees’ input and views on artificial intelligence and machine learning (AI/ML), such as:

• automation of back office processes;

• Bank Secrecy Act/Anti-Money Laundering (BSA/AML) utilization;

• decision making around credit or lending worthiness; and/or

• cyber security related to AI/ML.

Available public Office Hours will then be announced once during each of the third and fourth quarters. Topics during those quarters are planned as including digital assets, cyber security related topics more broadly, and other emerging technologies and innovations affecting the banking sector. The total estimated annual burden associated with the Office Hours is 180 hours and breaks down as follows:

Application Phase (per quarter)

Estimated number of respondents 60

Estimated time to respond to application 0.5 hours

Total Estimated Application Phase Burden 30 hours

Meetings Phase (per quarter)

Estimated number of meetings 15

Estimated time to participate in Office Hours 1 hour

Total Estimated Meeting Phase Burden 15 hours

Total Estimated Annual Burden 180 hours.

If you have any questions, please let me know. Thank you for your consideration.