Meeting summary

Technical Advisory Committee (TAC) for credit union data strategy and digital transformation

Date: November 29, 2021
Time: 9:00 am - 11:30 am
Location: Videoconference

FSRA’s Innovation Framework

The Innovation Office has been developed to support FSRA’s innovation ambition and to ensure we are addressing our statutory objects in a coherent, standardized manner. An overview of the innovation foundation, strategy and operating model, and key elements of the Innovation Framework were presented to the committee.

The committee discussed regulatory barriers to innovation and the role that the sector sees the Innovation Office playing within the sector. Account and product origination through digital channels was identified as a current barrier. Comments were made regarding the Innovation Office’s role and keeping innovation focused on regulatory needs and ensuring it is done in an effective and efficient manner that reduces cost and burden.

The committee is encouraged to connect with FSRA to identify any partners they are working with or if there are any solutions in mind for various products that are hindered by our existing regulatory framework.

FSRAForward update

The FSRAforward program is focused on simplifying processes and enabling individuals with technology and tools to support collaboration and enhance efficiencies. FSRA is focused on procuring a solution to provide the core capabilities and technology to simplify this process.

The initiative is progressing, and proposals are being evaluated. During this phase, planning and implementation timelines will be better refined and communicated with the committee.

Core regulatory solution

FSRA is looking for core capabilities with this solution; things like workflow management, automation tools, business rules engines, and improved modern interfaces with self service reporting tools that will help to optimize and streamline data and filing collection and modernise the approval process.

Proposals have been received for the core regulatory solution and the first stage of evaluations has been completed. Demonstrations are planned for early December, with a target of identifying a solution by mid-February 2022.

Sub committee activities

The RFP for the RPP is anticipated to be issued in January 2022. The current focus of the project is to review FSRA’s approach to stratify engagement with credit unions.

FSRA requested feedback from the committee on the challenges in accessing data.

Areas identified by the committee included:

access to developers / outsourcing
expense concerns around developing new data flows
challenges around maturity of systems
number of ancillary systems being used; likely other technology involved in regulatory information that will need to be identified
potential for variation in how credit unions use their Core Banking System products and how they access and use their data
processing power and potential expenses involved
expectations that large data sets are going to be perfect
potential impact on a credit union if they are undertaking a large core banking conversion at the same time as implementation

Following further discussion, the committee provided the following suggestions for FSRA’s approach:

provide early and supportive consultation/education sessions with sector
talk to Core Banking System providers/vendors and consider regular vendor consultation
implement changes in a phased approach
identify common taxonomies across credit unions and try to utilize data sets that already exist

RPP Process

The RPP journey was presented and areas where credit union involvement will be required during the process was highlighted. Some of these activities include planning for the prototype and developing the application and strategy as a joint partnership between FSRA and the credit unions. A detailed list of credit union roles and responsibilities was shared.

Questions were raised around the approach being used to stratify the sample; FSRA advised we would continue the discussion with credit unions to find the best way to approach the sample group to ensure there is a representative sample.

Data modernization

Principle-based regulation (PBR)

FSRA is transitioning to a principles based approach, and that approach is supported by risk-based supervisory framework. Under this framework, resources are focused on higher risk institutions and the supervisory approach is tailored to each credit union keeping in mind size and complexity. PBR is not prescriptive; it's outcomes focused, allowing credit unions to determine the specific behaviours and actions that support prudent outcomes.

An overview of the risk assessment process was presented to the committee.

Transition to PBR – data support

Enhanced risk data supports ongoing monitoring and more accurate and dynamic risk assessments which facilitates the transition to PBR. The benefits of enhanced data includes increased flexibility in regulatory outcomes, alignment between business objectives and regulatory requirements, more accurate risk assessments, and self-service portal reporting for credit unions.

The relationship of how data is used for PBR and RBSF was shared with the committee, which showed the link between required reporting and the FSRA supervisory functions, like capital adequacy, DIRF adequacy and ongoing monitoring.

Use of data

FSRA is the only organization with a view over the entire sector. Instrument level data on a monthly basis would allow FSRA to assess risk and financial stability in a timely manner and on a forward-looking basis.

It was noted that not all data would follow the same reporting frequency, and various reporting could continue to be done quarterly or annually (e.g., NCCF, NSFR or ICAAP). The concept of proportionality was further discussed, noting the variability of the different systems and ability of credit unions to provide the same level of data. FSRA will further determine the best proportionality approach (minimum data sets, further tailored to small, medium and large credit unions), with input from the committee.

A focused discussion was held on concerns over data creep. FSRA acknowledged that as a regulator we have to collect data, and as the sector has evolved, reporting requirements have been added to address risk. It was noted that if there was a material update to the data set it would need to go through a consultation or dedicated process to seek input from credit unions. The concept of privacy rights-based approach to gathering data was raised as something FSRA should consider further.

Frequency of reporting

FSRA presented on the benefits of monthly reporting. These include quicker detection of fast acting risks/contagion at both the individual and sector level, timely impact assessment and response to systemic events (e.g. COVID 19), dynamic RBSF risk profiles for each credit union for the purposes of DIRF premiums and regulatory engagement, credit union self serve access to more up-to-date data, more accurate DIRF adequacy assessment, improved stress capabilities and enhanced recovery and resolution planning capabilities.

A committee member questioned if FSRA would be willing to put together a white paper to show the evidence on how this will improve the regulatory mandate and to what degree.

Next steps

The next committee meeting will be held in February 2022.

Attendance

Invitee Name	Invitee Affiliation	Attendance Status (A)ttended; (R)egrets; (S)ubstitute
Luc Racette	Caisse Populaire Alliance	A
Matthew Hitchens	Copperfin Credit Union	A
Barb MacLean	Celero	R
Pierre-Yves Monin	Caisse Desjardins	R
Barry Doan	FirstOntario Credit Union	A
Michael Nguyen	Meridian Credit Union	S
Patrick Barr	Canadian Credit Union Association (CCUA)	A
Vinay Venugopal	DUCA Credit Union	R
Drake Reid	Motor City Credit Union	A
Mark Cauchi	Alterna Credit Union	A
Rob Palin	Fiserv	A
Michael Smit	Libro Credit Union	R
Anthony Piscitelli	Your Neighbourhood Credit Union	A
Parna Sabet-Stephenson	Gowling WLG	A
Dominic Naimool	Kingston Community Credit Union	A
Bradley Hodgins	FSRA	A
Joanna Wearing	FSRA	A
Alena Thouin	FSRA	A
Allison Wendt	FSRA	A
Lily Li	FSRA	A
Daniel Friedman	FSRA	A
Aleksandar Simic	FSRA	A
Brian Mullan	FSRA	A
Sandor Szalai	FSRA	A
Ellen Kaross	FSRA	A
Antoinette Leung	FSRA	A
Daniel Padro	FSRA	A
Mehrdad Rastan	FSRA	A
John Slowakiewicz	FSRA	A
Joshua Lerner	FSRA	A
Catherine Tam	FSRA	A
Leonor Carneiro	FSRA	A
Howard Hao	FSRA	A
Sylvie Charest	FSRA	A
Peter Stavropoulos	FSRA	A
Stephane Raby	FSRA	A
Karen Ryan	FSRA	A
Marlena Labieniec	FSRA	A
Andrew Fung	FSRA	A
Chris Georgakopoulos	FSRA	A
Anita Saxby	FSRA	R
Andrei Dragalin	FSRA	R
Kirk Quinn	FSRA	R