cyber resilience. we know that banks are already exposed to cyber risk. but they will become more vulnerable as digitalisation progresses. they will need to invest in staff who have the appropriate skills to handle such risks. and they will have to comply with rules and regulations on this front. ecb banking supervision will do its part. we will launch a number of on - site inspections on cyber risk in 2019, and we will continue to monitor the situation under our ssm cyber incident reporting process. we will also bring our expertise and knowledge to bear when contributing to guidelines being developed by the european banking authority on such issues. but the impact of technological change goes beyond banks. technology can also change the way in which we supervisors do our jobs, and it can change the way in which we think about risks. applying new technologies to banking supervision could not only make it more effective and efficient. it could also reshape our priorities. the greatest gains from what is known as suptech – supervisory technology – would be made in the collection and analysis of data. and there are many examples. automated reporting could ease the burden on banks and make data collection more efficient. machine learning could enhance the validation of data. virtual assistants could be programmed to address user complaints during data collection, for instance. in addition, suptech could help to improve the analysis of credit and liquidity risks. some experts even argue that suptech could become a third approach to supervising banks. in addition to the rules - based and principles - based approaches, there would be a data - driven approach. now, there is still a lot of uncertainty about the exact role suptech will play in the end. but it is already being applied here and there. let me give you a few examples from across europe. 2 the austrian central bank has developed a reporting platform that bridges the gap between the it systems of supervised entities and supervisors. the italian central bank is exploring ways of using machine - learning algorithms to forecast loan defaults. and the dutch central bank is working on the use of neural networks to detect liquidity risk. 3 but as a good supervisor, i must add a note of caution, of course – countering the optimism bias again. innovation is not risk - free in supervision either. suptech comes with a number of risks. think of the legal risks that arise when you start to handle ever larger amounts of sensitive commercial data. so as we supervisors start to apply new technologies, we must be

well. so, banking supervision can be seen as an exercise in tempering this “ optimism bias ”. our most basic task is to be a tad more pessimistic than others and to challenge the banks accordingly. though it may seem counter - intuitive, in some cases supervisors are more open to change than banks. banks sometimes focus on the short term, on the here and now. their preferred postbrexit outcome would probably be to stick to business as usual, to leave things – staff, it, risk management – as they are. but this is not an option, unfortunately. so it is up to the supervisors to push banks to be agile and act before it ’ s too late. european banking supervisors have worked hard to ensure that banks are prepared for brexit. we have been clear about what we expect. we have published information on our website, we have set out our expectations in interviews and speeches, and we have spoken directly with the banks, of course. 1 / 5 bis central bankers'speeches from the start, we identified areas of concern for individual banks – particularly those that plan to relocate from the united kingdom to the eu. we made it clear that we would not accept “ empty shells ”. and we made it clear that we would not accept comprehensive back - branching practices, where banks would provide services to eu clients only from branches in the united kingdom. we outlined the main areas we would be looking at when evaluating banks ’ risk management, their staffing and their booking models. we have clearly stated that we expect all banks to have sufficient capabilities in place to manage all material risks locally, that is, here in the euro area. we have also spelled out that the outsourcing of functions or services must not compromise operational independence. regarding booking models, there are still a small number of banks that have not fully adjusted in line with our expectations. again, it looks as if some banks are not as adaptable as supervisors would like them to be. the good news is that even these banks have now started to take action. we are aware, of course, that for some banks brexit implies big organisational challenges. we will work with these banks to find acceptable solutions. but let me be blunt : many of these banks are big enough to shoulder these changes and to bring staff to the eu, even though they might not see the need. the impact of brexit will vary from bank to bank, of course. that ’ s why we