Problems in financial systems come all of a sudden. Nowhere is there a single prevention strategy. Yet, concerted efforts should be made to safeguard the system. There is no way other than embracing key technological trends The banking fraternity in Nepal of late has been debating from where the next grave risk could stem in the sector. Managing liquidity while ensuring lending towards priority sectors has been the prime concern of the central bank for many years. Frankly speaking, the financial system in Nepal has got into the mess largely due to astonishing disruptions. On the one hand, the system faces deposit crisis, despite burgeoning interest rates on savings, and on the other, lending rates are still unstable. There clearly seems to be a mismatch. Nepal’s banking now needs to seek a forward-looking approach. This means embracing new technological advancements. It can largely address the existing problems. From the regulatory side, the concept of RegTech and SupTech are emerging. These two advancements are meant for the effectiveness of the financial system through strong oversight as well as comprehensive reform of the financial regulatory architecture. An innovative business model such as FinTech also has seen a fast growth. How FinTech shapes the banking transactions are already assimilated by regulators as well as the banks. Now question arises how we can effectively identify, monitor and mitigate risks stemming from FinTech innovations. It is meant to serve consumers better, and has permeated throughout virtually to make payments quickly and seamlessly. RegTech is a new concept aimed to develop regulatory regime. It helps banks meet regulatory requirements using the technology. RegTech enhances the ability of banks to remain compliant with critical regulations from AML compliance to know your customer (KYC) to customer due diligence (CDD). The effectiveness of RegTech is enhancing the regulator’s capability to adhere to the legislation. It utilises the innovative technologies such as artificial intelligence (AI) and machine learning (ML) for effective data governance and reporting. RegTech does have many benefits such as time reduction, improved fine provisions, adaptation to new regulations faster, well-developed data analytics and regular reporting times. Close monitoring of data and transactions of the institutions, non-compliance activities can be detected in real time, creating room for immediate action against violations. When technology is there, risks emerging through the cyber attacks and vulnerability cannot be rule out. Innovative techniques use a wide range of data managed through computer networks connected via the internet. It, therefore, requires an understanding as to at what level the technology has been designed for use. And the same level of risk-responding strategy is needed. It’s therefore high time we embraced innovative technologies in constructing a forward-thinking regime. By adapting to such innovations, institutions can respond effectively towards market disruptions while exerting their inner capabilities. The advantage of technological advancement is getting information in real time. It helps in solving many problems. Transactions in banks require information. How the information is stored, shared and disseminated depends on its reliability and validity. By adopting FinTech, RegTech and SupTech, we can achieve a paradigm shift in the sector. But this shift would be justified only when all potential benefits of using these applications are well harnessed. Technological advancement set the ground for the emergence of new-era of banking. As banking infrastructure and regulatory framework have been rapidly on the move, key technological trends for digital transformation have to come forward. Some popular trends are big data analytics, AI, ML, cloud computing, internet of things (IoT), robotic process automation (RPA) and distributed ledger technology (Blockchain). Digital innovations that are transforming financial services cannot be argued, hence should fruitfully be embraced for the new generation of banking. While adapting to these innovations, however, could also bring the issue of safeguarding cybercrimes. Robust and compatible cyber security measures also need to be developed to address the systematic risk. Big data analytics is becoming popular for analysing insights about the customers through behavioural, predictive and sentiment analysis. Overall, the outcome of big data analytics is driven by a slowdown in economic growth and pressure on margins. AI and ML have enormous applicability and benefits. Personalisation of costumers for their satisfaction is measured and established by artificial intelligence. Based on the transactions, customer’s behavioural insights are collected through effective tools. Cloud computing is a remote-server based model for delivering data services. Likewise, Blockchain technology decentralizes digital ledger technology distributed across the network of computers. It can streamline KYC implementation procedures as well as sharing risk profiles by banks with each other. Problems in financial systems are perennial. They come all of a sudden. Nowhere is there a single prevention strategy. There are obfuscations and denials from the system stakeholders. Yet, concerted efforts should be made to safeguard the system. There is no way other than embracing key technological-trends. Giri is deputy director at Nepal Rastra Bank