Central Banking Summer Meetings 2024 Key Takeaways

Regnology took pride in being an active participant in this community, engaging with financial regulators, gaining valuable insights into current market challenges, and contributing towards innovative solutions. Our involvement extended to leading discussions on “Streamlining communication and compliance: practical AI solutions for financial supervision” alongside distinguished speakers:

Tomas Olexa, Head of financial innovation, Czech National Bank
Jovelyn Hao, Deputy director, fintech innovation and policy research group, technology risk and innovation supervision department, Central Bank of the Philippines
Maxime-Edouard Laloire, Deputy head of finance & strategy, National Bank of Belgium
Moderated by Joanne Horgan, Account Director, Regnology

Here are some of the main highlights from our panel.

The future of central banking is inextricably bound to innovation

In today's rapidly evolving landscape filled with cyber threats, emerging technologies, and the challenge of managing constrained budgets while juggling ever-expanding responsibilities, central banks find themselves at a critical juncture to embrace cutting-edge solutions and transformative approaches to stay ahead of the curve and effectively fulfill their mandates in safeguarding financial stability and promoting economic growth.

Workforce, skills and resource capacity remain top challenges in fostering innovation

As stated by both Mr Olexa of the Czech National Bank and Mr Laloire of the National Bank of Belgium, the push for innovation is juxtaposed against the backdrop of an aging workforce, talent scarcity and limited resource. The demonstration of immediate yet impactful innovations become crucial in ensuring a smooth transition and sustainable progress within central banking institutions.

Artificial Intelligence (AI) emerges as the catalyst for innovation

AI has the potential to offer use cases that facilitate swift implementation and transformation across all operational facets but also revolutionize the way central banks operate in the digital age.

Presently, initiatives are based on public data, notably via the development of chatbots designed to help users find information (regulatory texts as a source). All three central banks have mentioned their efforts in creating internal chat GPTs to digitalize data, detect anomalies and re-allocate human skills focusing on core mandates. Mr Olexa emphasized, “AI is really about automation. It’s about how we can do more with less resources.”

Currently, initiatives and projects utilizing GenAI also serve as a testament to the Boards, showcasing the positive impact that AI can have on the core missions of central banks.

The current status of GenAI adoption in central banks: over two thirds (71%) of respondents are already using GenAI, and 26% have plans to incorporate such tools into their operations within the next one to two years. The adoption rate could therefore approach 100% in the near term.

Results from the survey conducted among the members of the GCRG in January 2024 BIS Papers No 145 Generative artificial intelligence and cyber security in central banking

AI governance and the risk of data leakage are key hurdles for central banks

Prior to integrating AI, a critical step involves the upstream classification of data to prevent any potential misuse of sensitive information by AI. This proactive measure not only safeguards sensitive data but also minimizes the likelihood of data breaches, thereby upholding the integrity of the financial system.

Cloud becomes the pre-requisite for central banks embracing new technologies and safeguarding data

The adoption of Cloud has become not just a trend but a necessity. The cloud serves as a secure and efficient solution for storing and protecting the vast amounts of sensitive information that central banks handle on a daily basis. With limited resources and expertise compared to tech giants like Microsoft, Amazon, and Google, central banks can rely on the cloud to ensure the safety and integrity of their data.

Highlighted by Mr Laloire, "With the evolution of technology and cyber threats, going to one of the major players is more secured in a certain way [...] They have the capacity to get the right people."

Furthermore, the cloud offers scalability and flexibility, allowing central banks to adapt to changing regulatory requirements and technological advancements quickly.

How Regnology can help

Regnology's Rcloud platform, launched in partnership with Google Cloud in 2022, was designed to cater to specific challenges, providing both supervisory authorities and financial services institutions with augmented regulatory reporting solutions, allowing them to improve responsiveness to rapid-changing requirements through elastic scalability and reliable infrastructure and rely on always up-to-date reporting systems. Rcloud for SupTech provides RSH clients with managed services on the Google Cloud Platform, offering full self-service for configuration of regulatory content according to their specific regulatory requirements, or delegating these tasks to Regnology for seamless execution.

Central Banking’s 2024 Regulatory Technology Services Award winner, Regnology’s Rconnect, is a communication and case management tool designed to streamline communication between financial regulators, tax authorities and regulated financial institutions. Assisted by AI, Rconnect fosters greater visibility, control and efficiency for all parties across the full regulatory reporting communication cycle.

Solution spotlight: Rconnect

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Technology innovation at the heart of the future of central banking in the digital age