We are focused on innovation in state financial services regulation and using technology to solve current and future challenges.
That is why CSBS has launched a series of exploratory initiatives, known as innovation challenges.
Each innovation challenge will have a different supervisory focus and may include:
- Tech sprints
- Proofs of concept
- Pilots
- Single or multi-year contracts
- Developing minimum viable products
What the innovation challenges mean for state agencies:
- Greater access to regulatory and supervisory technology solutions.
- More ways to stay engaged in important discussions.
What the innovation challenges mean for industry:
- Opportunity to partner with a network of state agencies through CSBS.
- Demonstrate capabilities to solve state regulators’ supervisory challenges.
Bank Financial Data Innovation Challenge
Background
Rapid change in the financial system demands more timely insights. The current state bank supervision paradigm focuses on point-in-time exams and, for most banks, relies on historical records to predict future risks. State regulators require quarterly reporting from banks to monitor bank health and performance in between examinations, which are conducted on a 12- or 18-month cycle. This lag in reporting and examination creates a gap between a risk event occurring and a regulator’s awareness of the conditions that may create the event.
Solving the problem:
The Bank Financial Data innovation challenge focuses on developing a proof of concept for a more modern system. Once developed, this proof of concept could lead to a pilot program that CSBS can implement and operate in conjunction with a member state agency.
Who is involved: This innovation challenge will involve eligible commercial technology vendors working with CSBS, industry partners, and our state agency members.
How commercial technology vendors can get involved: Contact [email protected].
Mortgage Compliance Dataset Tech Sprint
Background
States that perform supervisory examinations often request data from lenders as part of an examination. Historically, complying with these requests has been difficult and costly for lenders. In addition, the information and file formats requested could vary by state. These variances resulted in additional costs for both lenders and states conducting exams.
CSBS and states recognized the inefficiencies and other issues that existed with the historical processes and approached the Mortgage Industry Standards Maintenance Organization (MISMO) with the idea of creating a standard data request format. The standard data request format would include data required for examinations while using the MISMO standards underlying most of the existing data exchanges within the mortgage ecosystem.
Over the past several years, CSBS, state regulator examiners, lenders, vendors and other stakeholders collaborated within MISMO to develop a standard data exchange. MISMO issued the Mortgage Compliance Dataset (MCD) standard in October 2024.
CSBS is working with the state regulators to include the MCD as their standard examination data exchange protocol.
As a result, lenders will have to ensure their loan origination system (LOS) providers can produce the new MCD format
in compliance with the new MCD format requests. In addition, state agencies will need new compliance platforms to
that can receive and verify the MCD file standard.
Solving the problem:
CSBS will kick off a tech sprint (an innovation-focused event where groups or teams come together to address a set of
challenges) to bring together stakeholders to:
- Create awareness of the MCD standard.
- Address barriers to adopting the MCD standard.
- Drive key conversations.
- Build support from other state regulators.
- Ensure compliance providers understand regulators’ technology requirements for using the MCD.
Who is involved: State regulator examiners, state-licensed mortgage loan origination companies, LOS providers, and
compliance providers.
How stakeholders can get involved: More information about the MCD tech sprint will be added to this web page
soon. In the meantime, contact Kevin Byers, sr. director, nonbank supervision & enforcement at [email protected] if you have questions.