Home Artificial Intelligence ECB completes €200m-plus procurement as it looks to ‘pioneer’ SupTech innovation

ECB completes €200m-plus procurement as it looks to ‘pioneer’ SupTech innovation

ECB: The Frankfurt-based authority is stepping up its investment in innovative technology; (inset) Global Government Fintech's story on the procurement process getting underway (18 Jan 2021) | Credit: Pixabay; ProfessionalPhoto

The European Central Bank (ECB) has completed its first ‘SupTech’-specific procurement – with a potential spend of up to €227.5m (about £192m) – as it strives for ‘pioneer’ status in its use of emerging technologies.

Supervisory authorities such as the ECB – which oversees banks across Europe through the Single Supervisory Mechanism (SSM) and, in cooperation with national supervisors, is responsible for ensuring banking supervision is effective and consistent – have increasingly been turning to, and talking up, the possibilities of fintech-related solutions to improve their work.

Global Government Fintech revealed 15 months ago that the ECB was looking to significantly extend its capabilities in developing fields such as artificial intelligence (AI) and machine-learning by procuring outside expertise via a tender process with the overall title of ‘SupTech Digital Transformation Delivery and the Exploration, Prototyping, Deployment and Training of Emerging Technologies’. After a competitive procedure that caught the eye of some of the world’s biggest tech companies, the contract award notice has now been published.

Work is split into two ‘lots’: the first is for ‘SupTech digital transformation delivery including business process re-engineering and the deployment of emerging technologies’; and the second is for ‘brokerage of emerging technologies exploration, prototyping and training services for banking supervision and central banking’.

Five contractors have been appointed in ‘lot one’: d-fine; IBM (Deutschland); NTT DATA Deutschland/NTT DATA Belgique; Oliver Wyman and Senacor FCS. ‘Lot two’ has been awarded to a consortium comprising Intrasoft International, business school INSEAD and GFT Italia.

Using tech to ‘get the most from data’

The Frankfurt-headquartered ECB, which is led by president Christine Lagarde, launched the procurement process three months after the Financial Stability Board (FSB) published a report on the use of SupTech and regulatory technology (‘RegTech’) by FSB members and regulated institutions. This report found that technology and innovation are ‘transforming’ the global financial landscape, presenting opportunities, risks and challenges for regulated institutions and authorities.

“This tender shows the importance the European Central Bank is paying to cutting-edge supervisory and regulatory technologies, including artificial intelligence and machine learning. It is our goal for ECB banking supervision to be at the forefront of these developments,” an ECB spokesperson told Global Government Fintech in our report on the procurement getting underway.

Four months later ECB Supervisory Board member Pentti Hakkarainen delivered a speech entitled ‘The necessity of using supervisory technology’ in which he described the “great potential to use technology to get the most from the large amounts of data available to banking supervisors”.  The Finn said that “ECB banking supervision not only makes use of modern technology but also aims to become a SupTech pioneer”.

In his speech Hakkarainen spoke of “more than 100 SupTech tools under development across European banking supervision”.

European banking supervision was, he said, in the process of becoming a ‘digital innovation house’ based on ‘four building blocks’: an effective innovation model, a digital culture, an innovation ecosystem and successful delivery of business-related use cases.

ECB’s ‘SupTech Hub’ and ‘Virtual Lab’

The ECB has inevitably been growing its in-house SupTech capacity as its work has evolved from more traditional banking supervision to the use of newer technologies for the more than 6,500 users of the ECB’s banking supervisory IT systems. As the procurement process got underway the authority had about 15 people in its core Supervisory Technology Section, part of its Technology & Innovation Division, which sits in the Directorate-General SSM Governance & Operations. Ultimately, many more people than that across SSM D-Gs in total are involved in SupTech-related activity, for example, IT professionals.

In his speech last May Hakkarainen referenced a dedicated unit within the ECB – the ‘Suptech Hub’ – to facilitate all innovation work and ‘better connect IT and supervisory experts’, adding that the ECB had also created interdisciplinary innovation teams in the spring of 2021.

Global Government Fintech last year reported on the ECB’s development of a cloud-based SupTech platform called ‘Virtual Lab’ to enable remote collaboration across the SSM. In his speech Hakkarainen described the Virtual Lab as a “game changer” that would “further accelerate innovation”.

He also mentioned the introduction of the IMAS portal, launched early last year for banks to submit documents and communicate directly with the ECB (IMAS stands for ‘Information Management System for the SSM’); as well as the Supervision Innovators Forum, which convenes SupTech and IT experts from across European banking supervision.

The ECB also held a conference in November 2021 entitled ‘Technology and banking supervision connected’ featuring a keynote speech on ‘the imperatives of responsible artificial intelligence’ by the World Economic Forum’s head of artificial intelligence and machine learning, Kay Firth-Butterfield. Opening remarks at the event were made by ECB Supervisory Board chair Andrea Enria, while the authority’s SupTech head, Lukasz Kubicki, was among panel session moderators.

Lots and lots to do

In terms of the work to be allocated externally through the newly concluded procurement, lot one is the largest part, valued at €30m per year for an initial four years with up to three 12-month renewals (so, potentially €210m total); and lot two is valued at €2.5m per year with the same stated contract length (so, potentially €17.5m total).

The contractors’ success in the process does not guarantee specific assignments, with the ECB planning to allocate work via what are called ‘call-offs’. For example, a call-off within lot one could see all five parties submitting (new) bids should they be interested to do so.

External work could also be divvied up among sub-contractors (all of which are also named on the ECB’s award notice, underneath the relevant contractor). Sub-contractors listed include Quantexa Belgium, Regnology (Germany) and ActiveViam (UK).

The ECB regularly undertakes multi-year tenders of €100-plus for IT services but, even within the IT realm, its SupTech procurement has been a larger one.


‘SupTech use rockets but adoption barriers remain: survey’our news story (8 Dec 2021) on a paper from the Financial Stability Institute (FSI) that set out how travel restrictions and social distancing protocols ‘severely curtailed’ on-site inspections and prompted financial authorities to use more SupTech tools for their day-to-day oversight of companies

‘ECB eyes “cutting-edge” tech as it launches first SupTech procurement’our scoop (18 January 2021) on the launch of the process