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In the SupTech Loop #13

Hi Suptech Community,  

Welcome to the 13th 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.

This edition includes news from the Bank for International Settlements (BIS)CGAPEuropean Central BankReserve Bank of India (RBI)International Monetary Fund (IMF)Bank of ThailandBank of EnglandFinancial Conduct Authority (FCA)Central BankingHong Kong Monetary Authority (HKMA), and others.

Events

Cambridge SupTech Lab – Capacity Building and Education 2024 Programming: Sign up to be part of one of three online programmes that provide career-enhancing professional development for public sector managers and specialists to lead the digital transformation of their organisations. Across our six-week, asynchronous learning programmes – SupTech Frontiers, Practical Data Science in Financial Supervision, and Product and Organisational Innovation — participants will use modern technologies to craft applications that automate lengthy manual processes, distill data into intelligence, collaboratively develop new analytical frameworks, and engage with top technology vendors, researchers, entrepreneurs, and more! Attendees will leave with cutting-edge technology evaluations, pragmatic diagnostic frameworks, data management blueprints and a capstone project, as well as a certificate of completion from the Cambridge Judge Business School. They will also have the opportunity to be part of our Launchpad programme, taking their capstone projects to prototype development.

If you are a supervisor, regulator, policymaker, economist, examiner, actuary, analyst, data scientist, or technologist within regulatory, supervisory, or policymaking authorities, visit Cambridge SupTech Lab | Capacity Building and Education (ccaf.io) to learn more and enrol!

Navigating legal risks in central banking: Enhancing governance and compliance. This virtual event, hosted by Central Banking, brings together central bankers for three days of essential training on navigating dynamic legal landscapes and mastering responses to evolving technologies, regulations, and cyber threats. The event will be held between 26th and 28th March 2024. Read more here.

Highlighted

    • Bank supervisors must adopt a future-proof approach to understanding and using artificial intelligence (AI). Elizabeth McCaul, Member of the Supervisory Board of the European Central Bank, in an article has highlighted that in this digital age, the question is no longer about whether or not to use AI, but rather about how it can be used most effectively and responsibly. Therefore, supervisors should use AI to enhance internal supervisory capabilities and gain greater insights into the risks facing supervised banks as they, in turn, also deploy AI. Read more here.

Suptech Innovations

    • ILinux Foundation Charities (LF Charities) launches Tazama, an open-source transaction monitoring software. LF Charities, with support from the Bill & Melinda Gates Foundation, unveiled Tazama, which is the first-ever open-source platform dedicated to enhancing fraud management in digital payments. Tazama addresses key concerns of government, civil society, end users, industry bodies, and the financial services industry, including fraud detection, AML Compliance, and the cost-effective monitoring of digital financial transactions. Read more here.
    • Isle of Man regulator to adopt artificial intelligence (AI) tool for compliance-related interactions. The Island’s Financial Services Authority is to use artificial intelligence on its website. The regulator has signed an agreement with insurance technology company Regsearch after spotting it in its 2022’s Insurtech Accelerator Program. Regsearch will provide a chatbot powered by AI to offer help with compliance and reporting. Read more here.

Research Spotlight

    • CGAP researchers explore supply-side gender-disaggregated data (S-GDD) initiatives for advancing financial inclusion. The CGAP has published a paper examining how S-GDD has been collected and used, mainly by financial sector authorities and by providers, and the challenges and opportunities associated with this work. The dissection of gender-data continues to gather new evidence on the enabling environment for women’s economic opportunity. To unlock the S-GDD potential to contribute to women’s financial inclusion and women’s economic empowerment, a more systematic approach toward effective ways to collect and use S-GDD is needed, in the form of guidance. Read more here.
    • International Monetary Fund (IMF) research explores emergence of zombie banks. In their recent publication, IMF economists have found that country-specific factors have the biggest impact in determining whether a bank turns into a “zombie” institution. This implies that the banks do not receive remedial treatment from owners or regulators or, alternatively, remain chronically undercapitalized. There is need for a proper regulatory framework and an effective resolution regime to deal with zombie banks more decisively. Read more here.

Industry News

    • Bank of England (BoE) plans cloud-based data and analytics platform as well as artificial intelligence (AI) pilots. Following an independent review of the Bank’s approach, the BoE has embarked on a seven-step refresh of its data and analytics (D&A) strategy. Explaining the plan in a speech, James Benford, BoE director for data and analytics transformation, stated that at its heart is a new cloud strategy and an “ambition to manage the Bank’s data on the cloud unless there is a strong reason not to”. Additionally, the D&A modernisation programme is managing a controlled set of pilots of AI tools across the Bank. Read more here.
    • Bank of Thailand (BoT) and TikTok partner to promote financial literacy. This collaboration aims to empower Thai citizens with essential digital skills and knowledge to combat financial fraud and scams. By leveraging the popular social media platform to disburse engaging content, the BoT intends to reach a wider audience and equip them with the necessary tools to make informed financial decisions. Read more here.
    • European Union (EU) adopts instant payments regulation. The European Council has adopted a regulation that will make instant payments fully available in euro to consumers and businesses in the EU and in EEA countries. The new rules will allow people to transfer money within ten seconds at any time of the day, including outside business hours, not only within the same country but also to another EU member state. Read more here.
    • Britain’s Financial Conduct Authority (FCA) lifts restrictions on cryptoasset Exchange Traded Notes for professional investors.The FCA will not object to requests from Recognised Investment Exchanges (RIEs) to create a UK listed market segment for cryptoasset-backed Exchange Traded Notes (cETNs). These products would be available for professional investors, such as investment firms and credit institutions authorised or regulated to operate in financial markets only. Read more here.
    • Central Bank of Brazil (BCB) emerges as top at the Central Banking Awards 2024. Central Banking has unveiled the first of its annual awards, with Brazil taking the top prize as Central bank of the year. The BCB has striven to fulfil its inflation targeting duties while also modernising the country’s financial system. It has improved the central bank’s transparency and communications, reformed its approaches to foreign exchange interventions and supported financial stability. It has digitally transformed its own processes, burnished its environmental and financial inclusion credentials, while also upgrading its world-leading instant payments ecosystem, including efforts to incorporate a ‘digital real’ into its architectural framework. Read more here.
    • Hong Kong Monetary Authority (HKMA) launches phase 2 of central bank digital currency (CBDC) pilot and sandbox. The HKMA has kicked off the second phase of its retail CBDC pilot dubbed the e-HKD and a regulatory sandbox for stablecoin projects. The second stage will continue testing from the first phase and explore new applications of a digital version of the Hong Kong dollar. The HKMA completed Phase 1 of the pilot program, which tested using a CBDC in domestic retail payments, offline payments and settlement of tokenized assets. An enhanced e-HKD sandbox, leveraged on the wholesale CBDC sandbox to be built under Project Ensemble, will support Phase 2. Read more here.
    • Quantexa to deliver GenAI via Microsoft cloud. Quantexa, a firm that creates decision intelligence solutions for the public and private sectors, used the backdrop of QuanCon24, its annual customer and partner conference, to reveal its Decision Intelligence Platform roadmap, and provided an update on Q Assist, a generative artificial intelligence (AI) assistant that previewed in July last year.  The company also announced a partnership with Microsoft which makes Quantexa’s Decision Intelligence Platform immediately available on Microsoft Azure Marketplace. Read more here.

Opportunities

    • Basel Committee on Banking Supervision consults on measures to tackle window-dressing in the global systemically important bank (G-SIB) assessment framework. The Committee is seeking the views of stakeholders on revisions to the G-SIB framework aimed at constraining banks’ ability to lower their G-SIB scores through window-dressing. This will be achieved by requiring banks participating in the G-SIB assessment exercise to report and disclose most G-SIB indicators based on an average of values over the reporting year, rather than year-end values. The committee welcomes comments on all aspects of the consultation to be submitted by 7th June 2024. Read more here.
    • Reserve Bank of India (RBI) invites comments on the “Draft Disclosure framework on Climate-related Financial Risks, 2024.” The RBI has published Draft guidelines on Disclosure framework on Climate-related Financial Risks, 2024 that will be applicable to various financial institutions and is welcoming feedback or comments on the same by 30th April 2024. Read more here.

In case you missed it…

    • Supervisory stress testing: A primer. This note by Toronto Centre and accompanying podcast discusses the design, effective use, limitations, and interpretation of stress tests by financial supervisors. It explores a range of stress tests, from elementary, top-down applications to more sophisticated tests using scenarios applied bottom-up to multiple financial institutions.  Read more here.
    • Incorporating suptech is a top priority – Banco de España (BdE). The BdE has expressed its commitment to using new technology to work more effectively in its Strategic Plan.  This incorporates a plan for the promotion of technological innovation as a central bank of modernisation, while it also seeks to position the Banco de España “as a leading prudential supervision institution, especially in terms of credit and technology risks”. The authority seeks to capitalise on its’ rich data sources using tools like artificial intelligence. Read more here.

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Authors
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Cambridge SupTech Lab

Cambridge SupTech Lab

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Jose Miguel Mestanza Hirakata

Cambridge SupTech Lab

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Juliet Ongwae

Cambridge SupTech Lab

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Kalliopi Letsiou

Cambridge SupTech Lab

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Matt Grasser

Cambridge SupTech Lab

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Matt Grasser and Kalliopi Letsiou

Cambridge SupTech Lab

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Simone di Castri

Cambridge SupTech Lab

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