MAS and Google Cloud to advance capabilities in generative AI technology

The Monetary Authority of Singapore (MAS) and Google Cloud have signed a memorandum of understanding (MoU) to collaborate on generative artificial intelligence (AI) solutions that are grounded on responsible AI practices. The partnership will explore technology opportunities to advance the development and use of responsible generative AI applications within MAS and cultivate technologists with deep AI skill sets.  

The MoU provides a framework for cooperation in technology and industry best practices in three areas:

1. Identifying potential use cases, conducting technical pilots, and co-creating solutions in responsible generative AI for MAS’ internal and industry-facing digital services. 
2. Cooperating on responsible generative AI technology application development and test-bedding of cutting-edge AI products for business functions and operations, in line with MAS’ technology plans and other areas of mutual interest.
3. Supporting the technical competency development of responsible generative AI and deep AI skillsets for MAS technologists.

“This collaboration allows us to explore potential use cases in our functions and operations that could harness generative AI, while prioritising information security as well as data and AI model governance,” commented Vincent Loy, Assistant Managing Director (Technology), MAS. “Through this, we hope to inspire greater adoption of responsible generative AI in the financial sector.”

“Building on our deep experience in delivering enterprise-grade AI solutions that the financial sector is already using to tackle everyday business problems, we’re now providing refreshed skilling programs, high-performance infrastructure, large language models, and other tools to help financial institutions deploy generative AI with ease and speed, while protecting their data, applications, and users,” added Sherie Ng, Country Director, Singapore, Google Cloud. 

 

Authorities’ reports find clear increase in greenwashing in Europe

The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) have published progress reports on greenwashing in the financial sector. In these reports, the ESAs put forward a common high-level understanding of greenwashing applicable to market participants across their respective remits – financial markets, banking, insurance and pensions.

The ESAs understand greenwashing as a practice where sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services. This practice may mislead consumers, investors, or other market participants.

The ESAs also highlight that sustainability-related misleading claims can occur and spread intentionally or unintentionally concerning entities and products that are either under or outside the remit of the EU regulatory framework.

The National Competent Authorities (NCAs) and the ESAs are, therefore, working to meet expectations from stakeholders to ensure consumer and investor protection and market integrity and maintain a trusted environment for sustainable finance. Given the integrated nature of the financial system, the ESAs will be working in a coordinated manner to address greenwashing.

The EBA progress report provides an overview of greenwashing in the banking sector and its impact on banks, investment firms and payment service providers.

The outcome of the quantitative analysis of the greenwashing phenomenon shows a clear increase in the total number of potential cases of greenwashing across all sectors, including EU banks. It also indicates rising climate accountability: increased public attention to climate change has led companies to be held more accountable for their environmental policies, climate impact and disclosures.

Pledges about future ESG performance are considered the most prone to greenwashing, followed by ESG strategy, entities' objectives, ESG labels, and certificates. Both competent authorities and market participants estimate that greenwashing has the highest impact on reputational and operational (litigation) risks. The materiality of greenwashing is currently perceived to be low or medium for banks and medium or high for investment firms but is expected to increase in the future.

Finally, the EBA finds that several elements in the current or planned regulation and supervision may contribute to tackling greenwashing. These include the rules prohibiting unfair communication and marketing, several EU sustainable finance framework pieces, such as the EU taxonomy and ESG disclosures, and a set of provisions in the EBA Guidelines.

There are, however, challenges to ensuring that these tools are properly implemented to address greenwashing, such as adequate data and methodologies. In addition, the EBA notes that the sustainable finance regulatory framework is not yet fully developed or is still at an early stage of implementation, suggesting that some rules' benefits are not fully visible yet.

Responses to the call for evidence on greenwashing will be published on the ESAs websites in the following weeks. The final reports will be published in May 2024 and will consider final recommendations, including possible changes to the EU regulatory framework.

 

HSBC and Quantinuum explore quantum computing use cases in financial services

Quantinuum, a quantum computing company, and HSBC have announced a series of exploratory projects that exploit the potential near- and long-term benefits of quantum computing for banking with specific projects in cybersecurity, fraud detection, and natural language processing.

An initial exploration of the multi-stage collaboration is intended to demonstrate the use of quantum computing-hardened cryptographic keys, including uniquely combining them with post-quantum cryptographic algorithms to mitigate current and future cyber threats. This effort to strengthen resiliency against advanced cyber threats is increasingly critical as the transition point between the capabilities of classical and quantum computers continues to approach.

Quantinuum’s Quantum Origin is a platform that uses the operations of a quantum computer to strengthen the cryptographic keys used to protect transactions and identification processes. The platform is deployed on existing “classical” cybersecurity infrastructure. It uses a quantum computer to produce provably unpredictable cryptographic keys, which could offer an extra layer of security to protect the bank’s most valuable data. HSBC and Quantinuum will run Quantum Origin via a hardware security module (HSM) provider.

In the second part of the collaboration, the pair will research and explore the potential benefits of quantum machine learning (QML) and quantum natural language processing (QNLP) for HSBC’s business. The collaboration will examine advanced QML techniques enhanced by qubit routing and circuit optimisation techniques provided by Quantinuum’s architecture-independent software development platform, TKET.

Additionally, HSBC and Quantinuum will explore QNLP, a novel form of language-based AI that uses an explainable model rather than the “black box” methods of traditional classical large-language models. QNLP will be based on training quantum states and processes that encode word meanings. This approach may enable native NLP tasks such as question answering or text similarity, which could be valuable in regulated markets dealing with customer data.

 

Adyen tool targets improved daily cash flow for customers

Adyen has launched Payout Services, which is designed to enable its customers to payout acquired funds in the preferred method of their affiliated users or partners with increased speed. By removing unnecessary delays and third parties from the funds movement process, Adyen says it is able to free up millions in daily cash flow for customers, supporting greater operational efficiency and helping businesses to achieve their ambitions faster.

Adyen’s capability to do this stems from its branch and banking licenses and direct connection to real time banking and card schemes. By moving funds from point A to B within a single banking infrastructure, payments can be processed up to three days faster than the industry standard. 

With a single API, Adyen customers can payout globally to their user base such as gig economy workers and marketplace sellers, improving the platform experience with faster access to cash. The launch means that customers can access more of their money to earn interest, invest in research and development for future growth and minimise their need for external financing. 

The API means that instead of having to manage multiple providers across regions, which creates operational complexity and slows a business’ ability to scale, enterprise customers can manage funds globally with a single partner.

 

Weavr and Visa to deliver embedded finance globally

Weavr has partnered with Visa to accelerate the adoption of embedded finance solutions among B2B software-as-a-service (SaaS) companies. 

Embedded finance enables B2B software businesses to integrate financial services into their software to augment their existing product offerings or launch entirely new products and services. In addition to delivering more value to their customers, such software businesses can expect new revenue streams and improved customer retention.

The embedded-finance solutions crafted by Weavr (and integrating Visa capabilities) take the form of financial plug-ins that are seamlessly embedded into software. The plug-ins are financial products that are ‘embeddable by design’ - they bring together everything a business needs for specific use cases in segments spanning ERP solutions, HR management platforms, B2B Commerce and others while allowing complete control over the user experience for their end customers.

As the Weavr solution is primarily targeted to non-financial businesses, the financial plug-ins also cover compliance, regulation and data security areas.