“I encourage the government to look favourably on any new and innovative approaches when it comes to funding requests.”
In an interview with the Financial Review, Mr Longo said he wanted to boost ASIC’s use of artificial intelligence, machine learning, big data, predictive coding and cyber protection tools to become smarter about enforcement.
“We’re grappling with the technology debt,” he said. “A big part of the story is technology. The world is changing around us so rapidly. The role of AI, the role of data, we’re getting data from innumerable sources.
“As things stand, we’re still going to do a couple of hundred investigations a year even though we might get 20–30–40,000 data points.”
Mr Longo, who replaced Mr Shipton in June 2021, said processing and using data in its supervisory and enforcement roles was necessary to make ASIC’s work more efficient and lower the cost base for enforcement.
“Not only having very good lawyers, and we do have very good lawyers, but having people who have that data analytics and digital empathy, that’s a big training exercise for us,” he said.
Since Mr Longo’s arrival, a further $30 million alone has been reallocated to the agency’s data analytics office, and that’s before increased investment across the whole of the organisation. Direct tech investment increased 17 per cent over the past 18 months, all pulled from other internal areas.
Mr Longo suggested unless parliament appropriates more money for the task, further investment will need to be found with existing funding, which means making choices about how to fund other parts of the agency.
The Financial Regulator Assessment Authority’s (FRAA) first regulator review last year focused on ASIC, and while giving the regulator a pass mark, it cited gaps in data and technology capabilities as key issues, and specifically cited restrictions imposed on ASIC’s budget by government.
“During this review the FRAA has noted long-term underinvestment in ASIC’s data and technology capability,” the report said.
“The FRAA understands that historically this may have been driven by undue focus on day-to-day regulatory concerns at the expense of longer term structural and strategic considerations.
“It is also a function of ASIC’s capital expenditure budget which is set by government, with limited flexibility to reallocate its operational expenditure budget to capital expenditure.”
FRAA was formed in response to the royal commission into banking misconduct, which recommended closer examination of ASIC and the Australian Prudential Regulatory Authority’s effectiveness, it is headed by former Macquarie Group chief executive Nicholas Moore.
“ASIC requires a substantial uplift in its data and technology capability, which will involve cultural change,” the report concluded.