Determinant Factors of SupTech Adoption in Banking Prudential Supervision

Abstract

The relevance of SupTech in banking prudential supervision has increased in recent times as financial authorities strive to improve prudential supervision in a rapidly evolving financial ecosystem. In this context, this paper aims to explore the key determinant factors for SupTech adoption in banking prudential supervision from institutional, organizational, and technological perspectives. The primary aim is to identify key factors that significantly influence SupTech adoption in banking prudential supervision. The conceptual and analytical literature approach is employed in this study, based on report of internationals institutions and relevant literature. The institutional factors examined include digital transformation, data governance/SupTech strategies, supervisory independence, capacity, and authority type. Organizational factors include decentralized models, hub-and-spoke or centralized hub models, and the presence of a dedicated SupTech unit. The technological factors include cloud computing and artificial intelligence/machine learning. The findings of the study reveal that institution-wide strategies, supervisory independence/capacity, hub-and-spoke or centralized hub models, and the presence of a dedicated SupTech unit are critical factors for higher SupTech adoption. Cloud infrastructure and AI/ML integration further amplify supervisory effectiveness, but only when supported by robust data governance and security arrangements. CZU: 336.71.078.3:004; JEL: G28, G21, O33