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Singapore Allows Green Funding, Employs AI to Combat Greenwashing

The Monetary Authority of Singapore (MAS) has announced the first use case of NovA! to assist financial institutions (FIs) in assessing the real estate sector’s long-term viability. NovA!, an industry-wide AI platform for financial risk insights generation, is part of the National AI Programme in Finance and collaboration between Singapore-based banks and local FinTech firms.

NovA! will provide a valuable tool to help FIs generate prompt and actionable insights using structured and unstructured datasets and advanced computing.

– Sopnendu Mohanty, Chief FinTech Officer, Monetary Authority of Singapore 

Sopnendu added that this would make it easier for financial institutions to direct funds to projects and businesses that achieve sustainability performance goals.

In the first part of the programme, the focus will be on making it easier for FIs to evaluate how companies affect the environment and spot new environmental risks. FIs would be able to use NovA! for their Environmental, Social, and Governance (ESG) risk assessment when making, underwriting, and servicing loans linked to sustainability.

Moreover, FIs can use NovA! to find real estate corporate borrowers whose sustainability metrics can be improved by comparing their past environmental performance to that of their peers. On the other hand, during the underwriting process, NovA! will help FIs set the right sustainability performance targets (SPTs) for the borrowers by comparing the borrowers’ SPTs to the NovA!-made SPT Industry Benchmark

In addition, for loan servicing, NovA! will compare the borrower’s self-declaration with the actual sustainability performance indicators using metres or sensors to find greenwashing.

The NovA! ESG use case will also cut down on the time it takes for FIs to collect, process, and analyse data by using natural language processing (NLP) to automatically pull relevant information from documents. This will make it cheaper for FIs to run their businesses. It will be integrated with MAS’ Project Greenprint to support FIs’ sustainability journeys.

Greenprint will be used to supplement NovA!’s insights-generation capabilities, which will be made available to its partners via APIs.

Since the NovA! consortium was announced in November 2021, 16 members have joined. The development of NovA!’s ESG use case is being led by a core team within the NovA! consortium. The members’ areas of responsibility are:

  • Lead FIs: Contribute to solution design, data provision and product validation
  • Commercial Lead: Provide industry input and commercial perspectives
  • Product & Tech Lead: Provide the machine learning platform for the first use case.
  • AI Tech Developer: Provide AI capabilities in areas of solution development, with a focus on Natural Language Processing
  • Project Consultant: Facilitate subject matter discussions among the consortium members

Joint exercise for cyber crisis

MAS together with the Banque de France (BdF) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR) has recently carried out a joint crisis management exercise focused on cybersecurity threats. The initiative is part of the Memorandum of Understanding on Cooperation in Cybersecurity signed by those agencies in 2019.

The joint exercise tested the effectiveness of the three financial authorities’ cyber crisis coordination and response when dealing with scenarios such as ransomware, zero-day vulnerabilities, and IT supply chain attacks.

Given the global nature of cyber threats and the interconnectedness of the financial systems, cross-border cooperation is becoming increasingly important in ensuring financial stability and the resilience of critical financial services.

The joint exercise demonstrates MAS, BdF, and ACPR’s commitment to sharpening the collective response to major cyber-attacks targeting cross-border financial institutions via effective information sharing protocols. Such close collaboration improves the global financial system’s ability to maintain operational resilience and stability.

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