In the SupTech Loop #11

Hi Suptech Community,  

Welcome to the 11th issue of the Cambridge SupTech Lab bi-weekly LinkedIn newsletter, a source for updates on recent innovations, breakthroughs, opportunities and upcoming events in the field of suptech, as well as news from the Cambridge SupTech Lab team.

If you would like to flag any items for inclusion in the next newsletter, please email us at cambridgesuptechlab@jbs.cam.ac.uk. Occasionally, we also connect with our global community of supervisors, data scientists, vendors, and suptech experts via email to share event invites, news, or new courses – subscribe here.

In this edition, news from Bank for International Settlements – BIS, Organisation for Economic Co-operation and Development (OECD), European Central Bank, Toronto Centre, The World Bank, CGAP and others.

Highlighted

• • Cambridge SupTech Lab’s SupTech Frontiers programme kicks off February 12, registration is now open. A 6-week immersive online experience that draws on real-world case studies leveraging the Lab’s digital tools. You will walk away with a comprehensive understanding of the interplay between data, technology, and evolving business models in the financial sector; the related risks across supervisory areas, and ongoing market innovations; insights to formulate and develop digitally-first supervisory responses; reframing capabilities for supervisory processes, frameworks, and approaches; the ability to identify supervisory use cases that suptech can upgrade or rearchitect; and a certificate of completion from the University of Cambridge Judge Business School. Learn more and register at Cambridge SupTech Lab | Supervisor of the Future: SupTech Frontiers (ccaf.io).

Suptech Innovations

• • Cambridge Suptech Lab marketplace accelerating knowledge sharing of available suptech solutions. The Lab is a catalyst for the digital transformation of financial authorities, accelerating the integration of innovative technologies and data science into supervisory processes to meet both enduring and emerging challenges in the rapidly changing financial landscape. The Lab has a suptech marketplace consisting of a suptech vendor database which is a dynamic, web-based tool to explore and connect with solution providers who have been active within the global suptech market and a  suptech solutions tracker designed to allow users to navigate a global catalogue of financial authorities’ suptech solutions by use case, status, and geography. Read more and explore here.

Research Spotlight

• • Consumer finance risk monitor. The Monitor, developed by the G20/OECD Task Force on Financial Consumer Protection, synthesises the perspectives of 43 jurisdictions on risks to financial consumers in 2022 and 2023. The Monitor covers current and emerging risks stemming from the operating environment; demand-side risks; conduct-related risks; tools used to monitor risks; products and services giving rise to consumer detriment; consumer complaints; and financial scams and frauds. Read more here.
  • Bank of International Settlements (BIS) warns central banks of the “black box” effect in Artificial Intelligence (AI). In a recently published bulletin, the BIS highlighted the promises and pitfalls of AI, particularly noting that financial authorities using machine learning face the problem of hidden biases in models and the tendency for AI to “hallucinate”. Central bank collaboration and the sharing of experiences could help identify areas in which AI adds the most value and how to leverage synergies. Read more here.

Industry News

• • European Central Bank (ECB) set to run cyber resilience stress tests. The ECB will conduct a cyber resilience stress test on 109 directly supervised banks in 2024. The exercise will assess how banks respond to and recover from a cyberattack, rather than their ability to prevent it. The main findings will be communicated in the summer of 2024. Read more here.
  • BaFin increases focus on IT risks. German’s Federal Financial Supervisory Authority (BaFin) considers cyberattacks and the breakdown of IT systems among the greatest risks for the financial sector in its new report. The watchdog has identified a total of seven risks that it considers most capable of jeopardising the financial stability or the integrity of the German financial system. Read more here.
  • BIS Innovation Hub to explore promissory notes tokenisation. In collaboration with the Swiss National Bank and the World Bank, the Bank of International Settlements (BIS) has   launched project Promissa, an experiment aimed at digitally managing promissory notes. In most cases, these are still paper-based. The project will use distributed ledger technology to simplify their management and transparency. The project is one of the six projects disclosed by the BIS Innovation Hub for its 2024 work programme. Other projects focus on experimentations on cyber security, fighting financial crime (Project Hertha) and green finance. Read more here.

Opportunities

• • Financial Inclusion TechSprint. The FCA have launched a three-month Financial Inclusion TechSprint to explore technological solutions that can dismantle barriers to inclusion, particularly for consumers vulnerable to exclusion from financial products and services. The TechSprint will officially kick off on 7 March running until 30 May, with the Showcase Day being held at the Technology & Innovation Centre, University of Strathclyde in Glasgow, Scotland. Participants will engage with dedicated FCA representatives and an expert community. This TechSprint will focus on:
    • Technology that increases the probability of consumers being accepted when they apply for everyday financial services.
    • Technology that delivers positive outcomes for consumers when a firm declines their application for a product or service.
    • How technology, including AI, can help ensure that firms deliver good outcomes across the board to groups of consumers who have been excluded or not well-served in the past.
  • How to get involved:
    • Reports/Research/Data – If you have any reports, research or datasets that you would like to bring into the TechSprint for participants to consult, please reach out to Simran Singh and Lauren Cassells. The FCA are particularly interested in financial inclusion related projects or case studies, and lessons learnt.
    • Mentorship – Mentors will work across the participating teams throughout the TechSprint, sharing their subject matter expertise.
    • Roundtables – Throughout the program he FCA will hold roundtables to discuss the problem statements in further detail and identify shared challenges and opportunities. Please reach out to Simran Singh and Lauren Cassells if you would like to take part and/or present in a roundtable event alongside any suggestions for themes you would like to cover.
    • Observer for Demo Day – You can register as an observer to see the final solutions on the Demo Day on 30 May. This will be held in person, and the event will be live streamed.
    • Applications for this TechSprint are now open and the deadline to apply is 13 Feb. Here is the link to register as a participant, mentor, or observer: Financial Inclusion TechSprint – FCA.
  • Reserve Bank of India (RBI) proposes self-regulation within the fintech sector. The RBI has published draft rules that would allow the country’s vast fintech sector to regulate itself. The framework aims to achieve a balance between facilitating innovation by the industry and meeting regulatory priorities in a manner that protects consumers and contains risk. Comments or feedback from stakeholders and members of the public on the draft framework may be sent by the end of February 2024, through e-mail. Read more here.
  • Call for papers on Artificial Intelligence in Finance: 2024 Annual Meeting of the Central Bank Research Association (CEBRA). The Financial Stability Board is inviting submission of academic papers that analyse and provide insights on use cases of artificial intelligence in finance from the perspective of potential benefits and risks by 10th March 2024 for the 2024 annual meeting of CEBRA. The meeting is jointly organised by the Deutsche Bundesbank and the Leibniz Institute for Financial Research “Sustainable Architecture for Finance in Europe” (SAFE) and will take place in person from 28th to 30th August 2024 in Frankfurt am Main, Germany. Read more here.

Capacity Building & Education

• • Toronto Centre certified financial supervisor (CFS) programme. More intense and effective supervision remains a core element on the supervisory and regulatory agenda. The CFS programme, which contains 3 levels and with courses beginning in April 2024, is designed to develop supervisors and regulators with technical, higher decision-making, and leadership skills. It aims to support central banks and supervisory authorities who have adopted or will adopt risk-based supervision. Read more here.
  • Cambridge SupTech Lab – Three 6-week online programs to shape leadership and transformation. Training continues to emerge as the topmost area of support sought on suptech. Offering a blend of interactive and integrated learning techniques, the Lab delivers world-class online leadership education and experiential training that empower public sector leaders to deliver more inclusive, resilient, transparent and sustainable economies and financial markets through the development, adoption and implementation of cutting-edge suptech-applications. We are committed to advancing the development of suptech ecosystems through creating a skilled and empowered workforce. Join us for our 2024 cohorts.
    • 1st cohorts:
      • Supervisor of the Future – SupTech Frontiers: 8 April to 17 May
      • Distilling The Digital Oceans – Practical Data Science in Financial Supervision: 8 April to 17 May
      • Leading Transformation – Product and Organizational Innovation: 3 June to 12 July
    • 2nd cohorts:
      • Supervisor of the Future – SupTech Frontiers: 22 July to 31 August
      • Distilling The Digital Oceans – Practical Data Science in Financial Supervision: 9 September to 18 October
      • Leading Transformation – Product and Organizational Innovation: 4 November to 13 December

In case you missed it…

• • • Digital financial services (DFS) for financial inclusion: Tools for supervisors. This CGAP report provides practical guidance on the design and implementation of a risk-based supervisory approach focused on nonbank DFS providers and highlights common implementation challenges. It also briefly discusses a few emerging supervisory issues raised by innovative DFS, namely cloud computing, modularization, open finance, and artificial intelligence and machine learning. Read more here.
    • Getting ahead of the curve: Emerging issues in the use of artificial intelligence (AI) and machine learning (ML) in financial services. FinRegLab hosted a webinar with senior federal financial regulators on 17th January 2024 to discuss the growing use of artificial intelligence and machine learning in financial services, including credit underwriting. The webinar covered several aspects including the recent developments in generative AI, consumer protection concerns, model transparency as a recurring concern for AI/ML applications and relevant regulatory tools and initiatives. Listen here.

Upcoming Events

• • • BIS Innovation Summit 2024. The Bank of International Settlements (BIS) will be hosting the fourth edition of the BIS Innovation summit between 6th and 8th May 2024. Held virtually and in person in Basel, the event brings together global policymakers, senior executives from the financial and technology industries, and academics to discuss the critical issue:  “How best to navigate rapid technological innovation in the financial sector and in central banking.” Read more here.

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