would note that as we consider the types of financial services technology that may be useful to the banks we supervise, our rules and guidance need to keep pace. the federal reserve is also considering whether the rise of artificial intelligence and machine learning in banking might require an adjustment in regulation and supervision. ai is becoming more prevalent in customer service and machine learning can offer real opportunities to assess risk and find new customers. community banks face limits on the resources they can dedicate to researching and evaluating third party providers of these new services. regulators and supervisors should consider ways to encourage innovation by simplifying the process of third party selection, due diligence and monitoring. 4 to that end, staff from the federal reserve and other agencies have been jointly conducting significant outreach to industry and other stakeholders over the past several months. we want to hear from you. in addition to this outreach, a conference planned for january, 2021 will include views from academic researchers on the potential benefits and risks posed by artificial intelligence for banks of all sizes. technological innovation holds great promise to help community banks compete and succeed in the evolving financial services landscape. i look forward to continuing to engage on these issues in 2021 and to work with the icba and other stakeholders to foster an environment where communities and the banks that serve them continue to thrive. 3 / 4 bis central bankers'speeches 1 mckinsey & company, “ telehealth : a quarter - trillion - dollar post - covid - 19 reality? ” may 29, 2020, www. mckinsey. com / industries / healthcare - systems - and - services / our - insights / telehealth - a - quarter - trillion - dollarpost - covid - 19 - reality. return to text 2 cnbc, “ coronavirus crisis mobile banking surge is a shift that ’ s likely to stick, ” may 27, 2020, www. cnbc. com / 2020 / 05 / 27 / coronavirus - crisis - mobile - banking - surge - is - a - shift - likely - to - stick. html. return to text 3 american banker, “ consumers are relying more on finance apps, survey finds, ” september 15, 2020, www. americanbanker. com / news / consumer - reliance - on - finance - apps - spiked - because - of - coronavirus. return to text 4 michelle w. bowman, “ empowering community banks, ” speech at the conference for community bankers sponsored by the american bankers association, orlando, florida, february

use horizontal, or cross - firm, reviews to monitor industry practices, common investment or funding strategies, changes in the degree or form of financial interconnectedness, or other developments with implications for systemic risk. supplementing its individual and horizontal reviews, the liscc has also made increasing use of improved quantitative methods for evaluating the health and performance of supervised firms as well as the risks they may pose to the broader financial system. a similar committee structure within the federal reserve is being developed to help us meet our obligations to supervise systemically important financial market utilities. to improve our monitoring of the financial system and to coordinate work bearing on financial stability, we have also created a new office within the board, called the office of financial stability policy and research. this office brings together staff with a range of backgrounds and skills and works closely with other groups at the federal reserve. the office helps monitor global financial risks and analyze the implications of those risks for financial stability ; works with our bank supervisory committees, for example, on the development of quantitative loss models and alternative scenarios to serve as the basis for stress tests ; serves as a liaison to the financial stability oversight council and its various working groups ; and helps develop and evaluate alternative approaches to implementing macroprudential regulations. the recent comprehensive capital analysis and review, in which the federal reserve evaluated the internal capital planning processes and shareholder distribution requests of the 19 largest bank holding companies, is an example of a horizontal assessment with a macroprudential approach. in the wake of the crisis, banks ’ capital payouts had been kept to a minimum. as banks ’ earnings and capital positions continued to improve in 2010, however, some firms sought approval to increase dividends or restart share repurchase programs. the simultaneous assessment of the payout requests in the capital review allowed the federal reserve, working through the liscc, to evaluate not only the conditions of individual banks but also the potential implications of capital payouts for aggregate credit extension and the sustainability of the economic recovery. thus, the program had both microprudential and macroprudential goals. from a traditional safety - and - soundness perspective, we wanted each firm to demonstrate that it had robust risk - management systems as well as a capital plan that would allow it to manage potential losses in stress scenarios while comfortably meeting basel iii capital requirements as they are phased in. but, with the help of macroeconomic and capital market analysts, we also considered the implications of the requests for the capital available to the banking