Hi Suptech Community,
Welcome to the 25th issue of the Cambridge SupTech Lab bi-weekly LinkedIn newsletter, a source for updates on recent innovations, breakthroughs, opportunities, upcoming events in the suptech field, and 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 email our global community of supervisors, data scientists, vendors, and suptech experts to share event invites, news, or new courses—subscribe here.
This edition includes news from the AIR – Alliance for Innovative Regulation, Bank of England, CGAP, European Central Bank, Financial Conduct Authority, International Monetary Fund, Monetary Authority of Singapore (MAS), Regnology, Reserve Bank of Australia, Talanta 10, and others.
Save the Date! SupTech Week 2024 is happening 9-13 December!
SupTech Week is the largest annual gathering of global suptech experts and innovators. Join us to share ideas, research, solutions and insights on the digital transformation of financial supervision. Brought to you by Cambridge SupTech Lab, SupTech Week 2024 will bring several engagement opportunities to participants including a hybrid Forum with content partner World Economic Forum; a hackathon; bootcamps and a solutions marketplace. Partners from across the suptech ecosystem are invited to contribute to the event by showcasing solutions, leading sessions, and sharing their insights. More information is coming soon!
Implementing suptech to oversee digital financial services (DFS) in Ethiopia is underway. Following a diagnostic assessment of the National Bank of Ethiopia (NBE)’s supervisory data architecture, NBE has been working with Talanta 10 and the United Nations Capital Development Fund (UNCDF) to develop a prototype that will automate collection, processing, management, and analysis of data for DFS. The prototype is set to achieve data automation while prioritizing use cases involving supervisory reporting for service providers. Read more here.
Central Banking & Technology
Bank of England and Financial Conduct Authority (FCA) open Digital Securities Sandbox (DSS). Following the feedback received after consultation with the industry, which closed on 29 May, the FCA and the Bank made targeted changes to their approach and have now opened the DSS to applications. The DSS will allow participants to use developing technologies, such as distributed ledger technology (DLT) and to undertake the activities traditionally associated with Central Securities Depositories and trading venues. Read more here.
Australia’s Central Bank prioritizes wholesale central bank digital currency (wCBDC) over retail, citing more significant economic benefits. The Reserve Bank of Australia (RBA) has announced a strategic focus on launching a wCBDC over the next three years, moving away from the idea of a retail CBDC. In a speech by RBA Assistant Governor Brad Jones at the Intersekt Fintech Conference in Melbourne on September 18, RBA outlined its roadmap for wholesale digital money and infrastructure development. Read more here.
Monetary Authority of Singapore (MAS) sets up international advisory panel for cyber and technology resilience. The panel replaces MAS’ cyber security advisory panel, with an expanded mandate to cover technology resilience which, together with cybersecurity, significantly underpins the operational resilience of the financial sector. The panel will advise MAS on key emerging technology risks and threats facing the financial sector and recommend strategies and measures to enhance the technology and cyber resilience of Singapore’s financial sector. Read more here.
European Supervisory Authorities (ESAs) warn of risks from economic and geopolitical events. In their Autumn 2024 Joint Committee Report on risks and vulnerabilities in the European Union financial system, the European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA), and European Securities and Markets Authority (ESMA) have highlighted the ongoing high economic and geopolitical uncertainties. The ESAs warn national supervisors of the financial stability risks stemming from these uncertainties and call for continued vigilance from all financial market participants. For the first time, the report also includes a cross-sectoral deep dive into credit risks in the financial sector. Read more here.
The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) finds improvements needed amongst anti-money laundering (AML) supervisors. In its fifth report, FCA’s OPBAS found that while most professional body supervisors (PBSs) comply with money laundering regulations, how they supervise is still ineffective. The report found weaknesses in how PBSs used enforcement powers and tools to supervise members. Proactive information and intelligence sharing with regulators and law enforcement was also inconsistent. Read more here.
45 European suptech champions driving tech tools take-up: European Central Bank’s (ECB’s) McCaul. In a speech titled ‘The future of European banking supervision – connecting people and technology’ on 18 September, ECB supervisory board member Elizabeth McCaul provided an update on the growing number of suptech initiatives, including moves to “instill a culture that supports the adoption of our suptech tools and embeds advanced technology into regular supervisory processes.” 45 champions across 17 national competent authorities have reached over 1,000 supervisors through multiple channels, including workshops and guiding the use of suptech tools. Read more here.
Collaboration and collective effort are key to tackling fraud – Andrea Bowe, FCA’s director of the specialist directorate. In her Westminster Legal Policy Forum Keynote Seminar speech, Bowe noted that partnerships, where authorities share ideas, lessons learnt, and exchange data and intelligence, are essential in reinforcing defences and staying ahead of evolving threats. She highlighted the FCA’s close work with the industry through initiatives like the investment fraud tech sprint to develop practical solutions and the engagement with major big tech platforms like Google and Meta to raise awareness of illegal financial promotions and scam advertisements. Additionally, she pointed out that addressing mule activity is an area where collective efforts can substantially disrupt and greatly reduce the flow of fraudulent funds. Read more here.
Policymakers should promote the safe use of artificial intelligence (AI) in financial services – the Organisation for Economic Co-operation and Development (OECD) and the Financial Stability Board (FSB) roundtable. This event brought together experts from the public and private sectors and academics to examine trends and use cases of AI in finance. Participants discussed both opportunities and risks, sharing emerging best practices for policy frameworks. The roundtable concluded with a call for policymakers to prioritize safe AI practices, emphasizing a risk-based approach to model risk management, the importance of international cooperation for standard development, and the need for national financial regulators to regularly assess their capabilities. Read more here.
The Fintech Open Source Foundation (FINOS) releases first draft of AI Governance Frame. FINOS, the financial services umbrella of the Linux Foundation, announced multiple AI milestones at the Open Source in Finance Forum New York (OSFF NY). These developments include the draft release of a groundbreaking AI Governance Framework for financial institutions from the FINOS AI Readiness Special Interest Group and an invitation to the broader community to participate in this fully open initiative. Additionally, the broader FINOS AI initiative has been embraced by an impressive list of financial services and technology organizations. It is attracting new members who are leaders in AI, including NVIDIA, Protect AI, and Moody’s. Read more here.
Responsible digital finance ecosystem (RDFE): A conceptual framework. This working paper by the CGAP presents a conceptual framework for achieving a responsible digital finance ecosystem, where a wide range of actors—financial sector and other authorities, digital financial service providers, consumer representatives, and market facilitators—come together to safeguard consumers from potential harm and ensure that digital financial services enrich their lives. It outlines four key components, centricity, collaboration, capability, and commitment, and draws on real-life examples and case studies to provide a framework for financial consumer protection. Read more here.
Technology as a new frontier for macroprudential policy – Christine Lagarde, President of the ECB and Chair of the European Systemic Risk Board (ESRB). In her welcome address at the eighth annual conference of the ESRB, Christine Lagarde, highlighted that technology has transformed financial systems while maintaining their core functions, such as saving, borrowing, and risk management. Advances in computing, encryption, and artificial intelligence have enhanced efficiency, facilitated online banking, and given rise to new asset classes like crypto-assets. However, these innovations also introduce risks, particularly from concentration and reliance on external service providers. She emphasized that it’s crucial for macroprudential policymakers to adapt to these technological changes, harnessing new tools to analyse risks and improve resilience while fostering collaboration and safe data sharing across institutions. Read more here.
Events
DC Fintech Week 2024 to take place from October 21 – 24, 2024. This 8th annual event will gather visionaries, regulators and innovators in Washington D.C. to explore the fintech ecosystem, covering topics from crowdfunding and online lending to cryptocurrencies, cybersecurity, generative AI, and open banking. Read more and register here.
International Monetary Fund (IMF) to conduct in-person training on financial sector surveillance from December 9 – 13, 2024. The course provides a basic toolkit to assess financial sector risks and measure them against existing capital and liquidity buffers in the financial system. The discussions focus on the early identification of unwarranted macro-financial imbalances and the analysis of the transmission of financial distress across institutions, markets, and economic sectors. Junior to senior government officials tasked with surveillance of the financial sector are welcomed to apply. Read more here.
In-person training on selected issues of fintech regulation (SIFR) to take place in New Delhi, India from December 2 – 6, 2024. This course, presented by the IMF’s Monetary and Capital Markets Department, focuses on the prudential and conduct regulation and supervision of technology-driven innovation in financial services. It is designed to give mid-senior level participants an overview of the critical issues globally concerning fintech regulation, tailored to local needs. The course covers a broad syllabus that includes sandboxes and innovation hubs, blockchain and crypto assets (including stablecoins), machine learning, and suptech. Read more here.
Federal Reserve’s novel activities supervision program enhances the supervision of activities conducted by banking organizations supervised by the Federal Reserve. The program focuses on novel activities related to crypto-assets, DLT, and complex, technology-driven partnerships with nonbanks to deliver financial services to customers. It is risk-focused and complements existing supervisory processes, strengthening the oversight of novel activities conducted by supervised banking organizations. The program’s goal is to foster the benefits of financial innovation while recognizing and appropriately addressing risks to ensure the safety and soundness of the banking system. Read more here.
Regnology announces 31st annual RegTech Convention on November 18 – 21. This hybrid convention will unite over 2,000 attendees from 120 countries to think about technology’s power to transform the regulatory reporting landscape. The convention will question how the rapidly shifting tech paradigm has the potential to profoundly redefine the foundations of regulatory reporting, moving from a reactive to a proactive approach driven by efficiency and enhanced transparency and built on informed decision-making. Read more here.
The Alliance for Innovative Regulation (AIR) is hosting a virtual techsprint to combat digital payment fraud in West Africa. This event will bring together diverse stakeholders, including technology companies, consumer protection agencies, payment service providers, innovators, regulators, and subject matter experts, to collaboratively create solutions that will help detect and combat payment fraud. The techsprint will consist of two tracks: the Minimum Viable Product (MVP) track, scheduled for November 18 – 22, 2024, will focus on addressing payment fraud, while the Tazama track, running from October 23 to November 20, 2024, will work on creating low-cost solutions for continuous fraud detection. Additionally, a related conference will take place from November 18 to 22, 2024. Read more here.
The Central Bank of Egypt hosts the 48th annual meetings of the Council of Arab Central Banks and Monetary Authorities’ Governors on October 1, 2024. The Council addressed key economic topics, including managing monetary policy amid high uncertainty, the impact of rising private sector debt on financial stability in Arab countries, and the role of central banks in climate change. Discussions also covered regulatory frameworks for artificial intelligence in the financial sector. Hunter Sims, Director at the Cambridge Center for Alternative Finance, presented on “Ensuring a robust adoption of AI in the financial sector”, highlighting the evolving role of AI in financial supervision. This session was preceded by a high-level roundtable titled “Building More Resilient Financial System in the Digital Era” on September 30, 2024. Read more here.
