How to streamline the regulatory analysis of the “new” Circular 269 by BankIT? Easy, with Daitomic

Daitomic, RegTech's SaaS for accurate and real-time banking compliance

The uncertainty of the global socioeconomic environment and the rapidity of technological innovation are maybe the two characteristics that best define the times we are living in. Starting from the technology side, we have already talked about the topic of Generative AI and also about its application to the PRIIPS as a RegTech use case. Going into the more strictly regulatory issues, however, we have already noted how 2023 in finance will be the year of compliance. Why? Just think of the continuous and rapid technological, social and environmental changes, which imply a constant effort by regulators to ensure that innovation takes place within a regulatory framework that protects all parties involved. If the regulatory area related to ESG objectives can be seen as the new queen of compliance, the area of banking supervisory activities is certainly not far behind, as evidenced by the recent publication by the Bank of Italy of the 14th update to Circular 269, which provides the Guidance for Supervisory Activities. In such a framework, how do financial compliance professionals keep up with the constant updates? How can they make fast and accurate regulatory analysis? Our answer is clear: by automating those compliance processes steps where humans do not add value. And, even more clearly, they can do this exploiting our RegTech SaaS, Daitomic.

The Bank of Italy 14th update to the Guide for Supervisory Activities (Circular 269/2008)

However, before showing you how Daitomic concretely makes compliance professionals’ lives easier, it is appropriate to quickly focus on the regulatory content of the use case of this post. In fact, on 7 February 2023, the Bank of Italy published the 14th update to Circular 269 of 7 May  2008, a key document, which contains the Guidance for Supervisory Activities. The latter defines in a unified way the Supervisory Review and Evaluation Process - the so-called SREP - for supervisors, remote and inspection, of the central and peripheral structures of the Bank of Italy, in order to ensure consistency of assessments. The main purpose of supervisory activity is to verify the existence of the conditions for sound and prudent management within financial institutions, namely the supervised entities, as well as compliance with regulations. To achieve these results, the Guidance for Supervisory Activities contained in BankIT Circular 269 identifies specific procedures that follow an approach that is consolidated, capturing the overall risks and safeguards of intermediaries, and risk-based identifying relevant risks and their respective safeguards through the application of uniform patterns of analysis to intermediaries operating in the same areas of business. The procedures contained in Circular 269 are then based on a principle of proportionality, modulating controls according to the size, systemic relevance and problematic nature of intermediaries. In short, this is a crucial document for Italian financial institutions, the analysis of which requires the utmost attention and precision, but also a high use of human resources and time.

How to get regulatory alerting and automated analysis of BankIT Circular 269 in real-time

Now that we have highlighted the relevance of the 14th update of Circular 269 issued by the Bank of Italy and the impact this document has on the daily activities of financial compliance professionals, it is time to also tell you how the latter can benefit from the support of a RegTech tool like Daitomic. Over the past few years, at Aptus.AI we have deeply analyzed banking compliance work methodologies in order to reconstruct a generalized and standardized process of regulatory update and analysis activities carried out within financial institutions. In particular, the work of analyzing the regulatory perimeter inherent in the Guidance for Supervisory Activities is very delicate and onerous for financial institutions, as it must identify the impact that the BankIT Circular 269 update has on their internal processes and policies. And this is where Daitomic comes in, being a RegTech SaaS exploiting Artificial Intelligence to automate some specific steps of compliance processes through a standard, electronic and machine readable format of banking regulations. This latter enables automated analysis on documents, whereby Daitomic identifies impacted regulatory areas, changes introduced by the update, and other general information, which is sent in real-time with an alert email to the users interested in that document.

At this point, Daitomic users just need to click on the link contained in the email and access the platform, where they can interactively browse the regulation and a compare it with its different versions, already finding highlighted the changes introduced by the new regulatory update, in this case the 14th of Bank of Italy Circular 269.

Within the platform it is also possible to conduct advanced searches on other laws of interest, related to the same regulatory perimeter, create thematic collections of norms - Legal Inventory - and retrace the search history.

Based on the identified regulatory perimeter, Daitomic is also able to automatically extract new obligations introduced by the regulatory update and related penalties, if any, preparing the basis for a first-impact analysis.

In fact, automatically extracted obligations can be cross-referenced with impacted internal processes and policies, so that a first-impact analysis can be prepared in an automated manner. With this functionality, Daitomic makes it possible to accurately and quickly analyze the regulatory changes related to the 14th update to Bank of Italy Circular 269, thus significantly reducing the risk of error and the time needed by compliance professionals to analyze the document. But no worries: humans are not - and cannot be - replaced. On the contrary, they can finally do the activity in which they are truly essential and which no technology will ever be able to do for them: making the right decisions and developing strategies.