The FCA has just published an important Feedback Statement on its Digital Regulatory Reporting (DRR) Call for Input – see link – the latest step in a progressive but always slightly precarious choreography, as the FCA and the Bank/PRA build partnerships with the industry to explore the potential of technology to transform financial regulation.

It’s progressive because it involves new ways of working across regulatory divides without compromising the participants, but precarious too, because all concerned – firms as well as regulators – are typically operating slightly outside their normal ways of working, with limited resources stretched to the hilt. This blog explores what is the right for future progress and the issues coming up…

The first thing to recognise is that none of this takes place in a vacuum. In no special order, here is a subset of the issues that will shape regulation’s use of technology in the next few years: the path towards Brexit; leadership changes at both regulators; the timing of the next recession; the success or otherwise of Open Banking; and the ability of firms and the authorities to limit the impact of cyber attacks on the financial system.

However, there are still decisions to make that are well within the control of the participants. The over-arching question that unites them is how fast or slow should we try to go, and I’ll come back to this at the end. But first, here are five areas where important choices, one way or another, will be made over the next six months:

1. Participation: How much and on what terms will regulators be prepared to engage? The indicators on this are that they want to, but the models for doing so are relatively untested; six months from now, everyone will have gained a lot more experience, hopefully good.

2. Resourcing: Currently, almost all involved are making some kind of leap of faith – either working off the side of their desks or investing far ahead of any expectation of commercial return. This position isn’t sustainable in the long term, and by next May it will either have improved or worsened.

3. Regulatory data systems: At some stage, regulators will need to give the industry a clear signal of the speed and direction of travel they expect. One example - main data collection system, GABRIEL, is some 12 years old, and work to decide on its replacement is starting…

4. Community building: Lots of firms have collaborated in this work along the way – the same is true of the AML work I wrote about last week. As the regulators move forward, they need to decide whether and how to bring this growing community with them.

5. International cooperation: As far as I can tell, the UK has done a good job of collaborating with other national regulators in this area. But the cost of doing so has been minimal. Sometime soon, our work in this area will inevitably start to either converge or diverge from others.

And the over-arching question of how fast to move will also be answered at some level. Regulators are often accused of being behind the curve of industry developments. Sometimes this is valid, others not, but the last few years have demonstrated how critical it is that technology doesn’t end up in the first bucket. Uncomfortable as it may often be, the importance of regulators moving fast enough to stay engaged with the forefront of technology in financial services is hard to overstate.