Lawmaker Proposes Real-Time Regulatory Tech Study

A discussion draft from Rep. Bill Foster would have the Federal Reserve test open-source compliance and monitoring software with other regulators and institutions.

Updated on Nov. 5, 2026 in Banking

Lawmaker Proposes Real-Time Regulatory Tech Study

Live Poll

Should the federal government use real-time technology to monitor banks and credit unions?

Rep. Bill Foster released a discussion draft of the Real-Time Regulatory Study Act of 2026, directing the Federal Reserve to develop and test open-source technology for regulatory compliance and real-time financial monitoring. The Defense Credit Union Council welcomed the engagement and asked that small credit unions have a voice in the process.

Why it matters

The proposal comes amid concerns that artificial intelligence and around-the-clock payment systems could accelerate the spread of financial stress, and AI advances are creating new cybersecurity threats. For the United States banking system, the draft explores whether shared technology could ease compliance burdens across institutions of different sizes.

The draft sets three goals: publishing software modules within one year, completing a systemwide test within 18 months, and delivering a final report to Congress within two years. The extraction does not provide cost estimates or comparator figures, and it is unclear how much of the timeline will hold once the draft moves beyond discussion.

The players

Bill Foster

Bill Foster is a Democratic U.S. Representative from Illinois who released the discussion draft of the Real-Time Regulatory Study Act of 2026.

Federal Reserve

The Federal Reserve is the central banking system of the United States, which would develop and test the proposed open-source technology under the draft.

Defense Credit Union Council

The Defense Credit Union Council is an advocacy group representing credit unions that serve military and defense communities, and it responded to the draft by requesting a voice for small credit unions.

The details

The draft requires that any testing use synthetic or legally permitted historical data and prohibits access to live customer accounts. The Federal Reserve would work with other financial regulators, financial institutions, technology providers and researchers to develop publicly available demonstration software. The Defense Credit Union Council noted that open-source software carries costs for connecting systems, protecting information, training employees and maintaining technology.

Within one year: goal to publish software modules
Within 18 months: goal to complete a systemwide test
Within two years: goal to deliver a final report to Congress

Market Landscape

The draft proposes a voluntary, open-source approach to regulatory technology, which could reduce the cost barriers that have kept smaller institutions from building their own compliance systems. Whether the approach changes competitive dynamics between large banks and community or credit union lenders will depend on how the Federal Reserve structures the demonstration software.

If the draft advances, credit unions and smaller banks could eventually use shared, no-cost-to-license software for automated regulatory reporting and capital monitoring. Members would see no immediate change, since the draft is a discussion proposal with voluntary adoption and no set effective date for consumer-facing products.

The takeaway

Watch whether the final bill keeps adoption voluntary and gives smaller institutions a formal role, since those choices will determine whether shared regulatory technology reaches the credit unions and community banks most likely to need it.