ResTech: Innovative Technologies for Crisis Resolution

24 Pages Posted: 23 Jun 2020 Last revised: 13 Jul 2020

See all articles by Giuseppe Loiacono

Giuseppe Loiacono

SciencesPo Paris

Alessandro Mazzullo

University Paris Diderot, Sorbonne Paris Cité - Institute of Physics of the Globe of Paris

Edoardo Rulli

University of Rome Tor Vergata

Date Written: May 11, 2020

Abstract

The use of financial technologies (FinTech) by financial market participants fostered a discussion among public authorities on the use technologies for regulatory (RegTech) and supervisory (SupTech) purposes. This paper defines the concept and the scope of application of “resolution technology” (ResTech), i.e. the application of technologies: i) to support the work of resolution authorities in developing resolution plans and in the application of resolution tools to banks and financial firms; and ii) to allow financial firms to achieve better regulatory compliance.

This paper argues that the features and market dynamics of resolution differ from those of RegTech and SupTech: given the lack of private sector incentives to invest in R&D on how to resolve a firm’s crisis, resolution authorities are called on to do it. This paper identifies four main areas of ResTech: resolution planning, resolution execution, cross-border exchange of information and automated compliance for banks and financial firms. The adoption of big data architectures could transform resolution planning in a dynamic activity; in a similar vein, machine-learning algorithms could boost the application of existing resolution tools and support the determination of the resolution strategy.

This paper concludes that the benefits of ResTech need to be measured against the increased risks taken by technology adopters. In a technology-driven environment, resilient IT infrastructures and e-governance processes are essential to prevent operational, reputational and legal risks.

Keywords: ResTech, resolution, data collection, data analytics, innovation, big data, machine learning, resolution tools

JEL Classification: C88, C89, G20, G38, O31, O32

Suggested Citation

Loiacono, Giuseppe and Mazzullo, Alessandro and Rulli, Edoardo, ResTech: Innovative Technologies for Crisis Resolution (May 11, 2020). Available at SSRN: https://ssrn.com/abstract=3598527 or http://dx.doi.org/10.2139/ssrn.3598527

Giuseppe Loiacono

SciencesPo Paris ( email )

27 Rue Saint-Guillaume
Paris, 75007
France

Alessandro Mazzullo

University Paris Diderot, Sorbonne Paris Cité - Institute of Physics of the Globe of Paris ( email )

1 Rue Jussieu
Paris, 75205
France

Edoardo Rulli (Contact Author)

University of Rome Tor Vergata ( email )

Via di Tor Vergata
Rome, Lazio 00133
Italy

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