Batchimeg Batbold, Director of Sandbox Unit at Financial Regulatory Commission of Mongolia and Secondee at the Cambridge SupTech Lab
The Asia-Pacific region is home to a highly diverse financial ecosystem, spanning advanced economies such as Singapore, Australia, and Japan and emerging markets with rapidly expanding fintech sectors, including Indonesia, the Philippines, and India. Each jurisdiction’s unique regulatory landscape reflects differences in institutional structures, technological maturity, and market dynamics.
Against this backdrop, financial authorities across APAC are increasingly integrating suptech solutions to enhance supervision and adapt to the fast-evolving financial landscape. According to the State of SupTech Report 2024, 67% of regional financial authorities in the region have already deployed suptech applications, with 50% utilising two or more solutions. However, a comprehensive suptech strategy remains a work in progress — only 16% of financial authorities have fully implemented a suptech roadmap, while 67% are still developing one. The focus areas for suptech adoption in APAC include consumer protection, cybersecurity, climate risk monitoring, and AML/CFT compliance.
At the recent SupTech Week 2024 event hosted by the Cambridge SupTech Lab, various sessions explored global supervisory technology implementations. Lisette Cipriano from the Asia Development Bank moderated the dedicated panel, offering valuable insights as regional supervisors shared their experiences deploying suptech tools to enhance their regulatory oversight capabilities. These discussions illuminated how technology reshapes supervisory approaches in one of the world’s most dynamic financial regions.
Innovative SupTech Applications across APAC
As suptech gains traction across the APAC region, financial authorities deploy increasingly sophisticated solutions to address critical supervisory challenges. During SupTech Week 2024 event, several of these solutions were showcased, demonstrating the transformative potential of suptech.
AI-driven policy and analytical tools: AI and Generative AI transform risk assessment and policy analysis. The Reserve Bank of India has developed impressive in-house solutions leveraging advanced technologies for monitoring market risk in banks’ investment portfolios and interest rate swaps. Their approach integrates data from various sources with Bloomberg terminals for validation, then uses machine learning techniques — particularly Generative Adversarial Neural Networks — to predict floating rates and assess portfolio sensitivity.
They have also implemented natural language processing tools to analyse bank board notes, classifying discussions about risk types and generating sentiment scores to identify potentially vulnerable entities. These models leverage machine learning and statistical methodologies to identify vulnerabilities in financial institutions and streamline risk-based supervision.
Similarly, the Bank of Thailand (BOT) is leveraging AI to streamline governance risk assessments by analysing board meeting minutes and agendas – a traditionally cumbersome process. BOT has also incorporated AI to measure the effectiveness of debt restructuring policies, utilising a multi-agent chatbot to simplify complex policy questions and an SQL coding assistant to help non-technical analysts manage large datasets.
Meanwhile, Indonesia’s Financial Services Authority (OJK) has shown its sentiment analysis tools to track consumer behaviour and detect industry trends in digital finance. With crypto asset regulation having begun in Indonesia, OJK has committed to using suptech tools from the outset to monitor industry developments and assess potential risks.
Money laundering risk detection systems: Suptech enhances AML measures across the region. Bank Negara Malaysia (BNM) has deployed supervised and unsupervised machine learning models to identify suspicious activity among money service businesses, integrating compliance reviews and auditor insights alongside structured data. Meanwhile, the Australian Transaction Reports and Analysis Centre (AUSTRAC) has developed FinTracer. This privacy-preserving, open-source system detects money laundering patterns through transaction networks and cryptographic techniques, enabling secure cross-border analysis without compromising data confidentiality.
Climate change and green technology: As climate risks become a top regulatory priority, APAC authorities are integrating suptech initiatives with sustainability objectives. Financial authorities in Southeast, including those in Indonesia, Vietnam, and the Philippines, are leveraging Suptech tools to monitor climate risks in agriculture and forestry, automate MRV (monitoring, reporting, and verification) systems for decarbonisation projects, and integrate sustainability taxonomies into regulatory frameworks. These innovations enhance financial supervision, streamline green investment strategies, and improve climate-related risk assessment.
The Monetary Authority of Singapore (MAS) incorporates climate stress testing and environmental risk assessments into its economic models, recognising that traditional financial models struggle to capture climate-driven tipping points. MAS has conducted industry-wide stress tests, simulating extreme weather events to evaluate financial sector vulnerabilities, particularly in the banking and insurance sectors.
The Australian Prudential Regulation Authority (APRA) is extending climate scenario analyses to 2050 using the Network for Greening the Financial System (NGFS) frameworks, focusing on granular, localised threats—down to the street or property level—to prevent broad averages from masking critical risks. APRA also examines the rising cost of insurance and its impact on financial stability, as some high-risk areas may become underinsured, increasing systemic risk for banks and mortgage lenders.
Blockchain-based solutions are emerging in climate risk management, with tokenised carbon credits and blockchain-verified climate disclosures enhancing transparency and market integrity. Open-source tools from the NGFS and the BIS Innovation Hub’s digital twin technology facilitate cross-jurisdictional collaboration, improving the ability of financial regulators to assess and mitigate climate-related risks.
Consumer protection and digital supervision: Consumer protection remains a top priority for APAC regulators. The Bangko Sentral ng Pilipinas (BSP) introduced BSP Online Buddy (BOB), an AI-powered chatbot that automates complaint handling, delivers real-time fraud detection, and gathers data for market conduct supervision. Insights from this initiative informed the 2022 Financial Consumer Protection Law, reinforcing efforts to safeguard consumers. To amplify consumer oversight, BSP is developing a “Digital Supervision Platform” that consolidates data from prudential and market conduct units, ensuring a unified supervisory approach and real-time visibility into emerging consumer risks.
Suptech implementation challenges and solutions
Integrating technology into supervisory processes has presented various challenges. Market volatility, evolving regulatory landscapes, and emerging cyber threats create a complex supervisory environment requiring continuous adaptation by financial authorities.
The Philippines’ banking sector experience illustrates the challenges posed by the digital divide in APAC. When deploying its API-based reporting platform (PRIME), the BSP encountered significant hurdles due to varying technological readiness among its more than 400 banks. While larger commercial banks quickly integrated the system, smaller community banks struggled with expertise, infrastructure, and financial resource limitations. BSP adopted a phased approach to overcome this challenge, offering alternative reporting solutions for smaller institutions while gradually encouraging the full adoption of digital tools. This strategy addresses a regional issue where fragmented banking systems and financial literacy gaps impede rapid digital transformation.
Beyond institutional readiness, the transition from proof-of-concept (PoC) to full-scale implementation posed critical challenges. As BSP’s Assistant Governor Lyn Javier described it, “This is actually where the rubber meets the road.” While the API-based system functioned well in controlled environments, real-world deployment uncovered unforeseen technical glitches, operational constraints, and the need for quick, pragmatic decisions. Supervisors had to prioritise essential features over ideal ones and continuously adjust processes to maintain regulatory objectives while ensuring seamless implementation. BSP also recognised the need for extensive upskilling of regulatory staff to effectively manage and integrate new technologies, highlighting workforce readiness as a fundamental requirement for suptech success.
Cyber fraud and financial crime prevention represent another significant challenge. The increasing use of real-time payments and digital banking has led to a rise in cyber threats, making it essential for regulators to enhance risk-based monitoring frameworks. While predictive modelling and AI-driven transaction monitoring tools are becoming essential for fraud prevention, their effective implementation demands significant investment in digital infrastructure, workforce training, and cross-border coordination.
APAC financial authorities are responding by strengthening regional collaboration. In July 2024, the BNM, BSP, MAS, BOT, and the RBI agreed to work towards the live implementation of Project Nexus, a multilateral initiative interconnecting fast payment systems to ensure seamless and secure cross-border transactions. Additionally, regulatory sandboxes for suptech are being explored, providing a controlled environment where financial authorities can test and refine new supervisory technologies before full-scale deployment.
Building a resilient suptech ecosystem in APAC
Beyond technology, suptech’s success hinges on effective governance, adaptable regulations, and human capital development. Financial authorities must navigate change management and cybersecurity concerns and integrate non-technical, supervisor-friendly tools to fully leverage suptech’s potential. During the event, SupTech Week 2024, experts highlighted responsible technology usage, ethical AI deployment, and capacity-building initiatives as foundational to successfully implementing digital supervision.
The role of ethical AI and responsible innovation: As APAC financial authorities integrate AI into their supervisory processes, ensuring fairness, transparency, and accountability is a top concern. The MAS leads the region with its Fairness, Ethics, Accountability, and Transparency (FEAT) Principles, establishing a benchmark for ethical AI in financial supervision. Implementing AI risk assessment systems and generative AI models requires robust frameworks to mitigate bias and uphold ethical decision-making throughout their lifecycle.
Collaboration and standardisation: Despite promising developments, the region faces hurdles in data standardisation, cross-border compliance, and skill gaps among supervisors. Emerging markets, in particular, struggle with granular data collection and balancing proportionality with regulatory necessity. Experts highlighted the need for regional partnerships and proposed the establishment of a unified suptech consortium for APAC, enabling regulatory authorities to align best practices and develop shared tools for seamless implementation.
Capacity Building and Human-Centric Innovation: While automation and AI optimise supervisory efficiency, human oversight must remain central to decision-making. Countries such as Malaysia, Indonesia, and Vietnam prioritise digital literacy programmes and nurturing change agents to foster a human-centric approach to suptech adoption. Institutions like the BSP are developing strategic roadmaps to integrate suptech effectively, anchored by ethical governance.
Looking forward: priorities for 2025 and beyond
SupTech Week 2024 underscored the Asia-Pacific region’s pivotal role in shaping the future of suptech. As financial authorities across APAC look ahead, several priorities will shape the evolution of suptech in the coming years. Real-time risk monitoring, particularly for payment systems, is a central focus as regulators work to strengthen fraud prevention and cybersecurity in an era of rapid digital transactions. Expanding the use of alternative data and AI-driven analytics will refine supervisory capabilities, enabling authorities to detect emerging risks with greater precision. Cross-sectoral integration of suptech tools will also be key to ensuring seamless oversight across financial sectors, reducing regulatory arbitrage.
Consumer protection remains at the forefront, with technology-driven approaches set to enhance regulatory interventions in digital finance. Finally, scalability will be a defining factor for future suptech initiatives- ensuring that solutions can grow alongside increasingly complex financial system.
APAC’s financial authorities have a unique opportunity to set the pace in global innovation by embracing scalable, ethical, and collaborative suptech solutions. By prioritising knowledge-sharing, cross-border cooperation, and responsible AI deployment, the region can establish a future-proof regulatory landscape that fosters financial stability, inclusion, and resilience in the digital era.
