Matt Grasser spoke at the Asociación de Supervisores Bancarios de las América (ASBA) event held on July 24, 2024, in Costa Rica, which brought together key representatives from financial authorities across Latin America and the Caribbean (LAC), focusing on suptech and exploring collaborative opportunities with the Cambridge SupTech Lab to enhance regional supervision capabilities and technical assistance.
Why SupTech, Why Now?
The digitalisation happening in the private sector is driving a need for changes in financial supervision. Traditional methods are no longer sufficient to handle new and growing risks. Suptech (supervisory technology) is the answer, providing modern tools that unlock and accelerate digital transformation of regulatory oversight in the form of supervision and risk management. Importantly, this journey is continuous—a process of incrementally adapting and composing a suite of suptech solutions, rather than chasing a single, all-encompassing step change.
Survey responses underlying the State of SupTech Report 2023 by the Cambridge SupTech Lab shed light on the current state of suptech in LAC, eleven financial authorities from the region participated. Many suptech implementations in this region are still in the initial stages and primarily focus on prudential, anti-money laundering (AML), consumer protection, and cyber risk supervisory use cases. There is a high demand for later-generation advanced data collection and text processing technologies, but these are not widely used yet. This shows a clear gap between the earlier-generation tools currently in use and those that are needed.
Suptech efforts in LAC are still experimental, currently at Stage 0 (Manual) and Stage 1G (Minimal Tech). The goal is to foster the move through the suptech journey, towards 2G (Digitally Transformed) and later to 3G (Advanced Tech) and 4G (Big Data and AI). To achieve this, financial authorities need consistent support in training, funding, and technical assistance.
The Lab helps accelerate financial authorities’ path through the SupTech Generations using a supervisor-centred approach to learn, experience, and build suptech into their core supervisory processes. The Lab achieves this by offering a range of services such as research, capacity building, technical assistance, application development, and fostering a collaborative ecosystem. They provide online training, technical support, and help develop suptech solutions through agile methods.
Moreover, each stage of this “Learn. Experience. Build.” journey is powered by a corresponding digital platform. Users can learn via the Lab’s Marketplace, Library, and intelligence platforms. The Lab’s Digital SupTech Diagnostic tool allows authorities to experience the process of tailoring suptech to their agencies’ idiosyncratic needs by assessing their current capabilities and identifying areas for improvement. And the Lab’s Data Gymnasium platform provides an environment for supervisors and their collaborators to build prototypes of new data science notebooks and models leading to the development of suptech solutions.
Through this approach, the Lab has collaborated on notable projects in LAC with financial authorities like CNBV México, SFC Colombia, BanRep Colombia, CMF Chile, SBS Peru, and SEPS Ecuador. These projects have addressed various aspects of financial supervision, including AI-powered AML supervision, consumer protection, and financial market monitoring. The Llab’s approach to guiding authorities through their suptech journey—Learn, Experience, and Build—is essential for advancing financial supervision in today’s digital age.
Fundamentally, the SupTech Lab provides comprehensive and scalable support to help financial authorities adapt to digital changes, ensuring they can leverage digitally transformed processes and suptech tools to effectively manage novel and newly transformed risks and opportunities as the financial sector continues to evolve.
Building on the example of ASBA consolidating and galvanising the suptech conversation among their members in the LAC region and beyond, the Lab actively encourages financial authorities to collaborate. Authorities are urged to explore their common regional or thematic challenges and aspirations as they prepare to take the next steps of this transformative journey.
