Dive Brief:

• About 20 data and technology companies are set to compete to develop a method to give the Federal Deposit Insurance Corp. (FDIC) more timely and targeted information on banks’ deposits and credit exposure, The Wall Street Journal reports. The effort, which launches Monday, could replace quarterly reports.
• The effort would focus on modernizing the data the FDIC collects from the roughly 3,200 community banks it regulates.
• The move to update the FDIC's systems began before the coronavirus pandemic, but the outbreak has shown how stale bank reports can be. The FDIC couldn't brief the public on first-quarter data until early June, and that data set didn't stretch past March — the month the economic downturn accelerated.

Dive Insight:

The regulator collects daily data from big banks, but measuring the health of smaller financial institutions can be tedious. Call reports, which banks file up to 30 days after the close of a quarter, can span 60 pages and contain 2,200 data points. But data on, say, commercial real estate loans — which the regulator hopes to watch more closely — isn’t the most up-to-date.

"What we would like to do is frankly make the call reports obsolete, and not because we wouldn't have the data but because we would have better data and we would have more timely data," FDIC Chairman Jelena McWilliams told The Wall Street Journal.

The agency declined to identify the companies that are competing in the effort. However, a prototype is expected in about six months. Banks would be encouraged but not required to use the newly developed data system.

Advocates said the effort would help the regulator better police market risk, which in turn could improve consumer protection, fight financial crime and make banking more inclusive.

"These kinds of efforts are going to transform financial regulation," Jo Ann Barefoot, a former deputy comptroller of the currency who now serves as CEO of the Alliance for Innovative Regulation, told The Journal. "They can't see most of what’s going on in the financial system in real time, because they don’t have good enough data."