MAS Taps AI-Powered NovA! For Green Financing as Its First Use Caseby Fintech News Singapore June 22, 2022
The Monetary Authority of Singapore (MAS) announced the first use case of NovA! to help financial institutions (FIs) assess the sustainability performance of Singapore’s real estate sector.
NovA! is a part of the National Artificial Intelligence (AI) Programme in Finance that aims help FIs harness AI to generate insights on financial risk.
In the initial phase, the programme will focus on enhancing FIs’ ability to assess companies’ environmental impact and identify emerging environmental risks.
FIs would be able to tap on NovA! for their ESG risk assessment for originating, underwriting and servicing of sustainability linked loans.
At loan origination, FIs can use NovA! to identify real estate corporate borrowers whose sustainability metrics can be improved, by comparing their historical environmental performance to that of their peers.
During underwriting, NovA! will assist FIs to set appropriate sustainability performance targets (SPTs) for the borrowers, by comparing borrowers’ SPTs with the SPT Industry Benchmark generated by NovA!.
For servicing of loans, NovA! will compare the actual sustainability performance indicators (through direct use of meters or sensors) against the borrower’s self-declaration to detect greenwashing.
The NovA! ESG use case will also reduce the amount of time it takes for FIs to collect, process, and analyse data through the use of natural language processing (NLP) technique to automatically extract relevant information from documents. This will reduce the overall cost of operations for FIs.
To support FIs’ sustainability journeys, NovA!’s ESG use case will be integrated with MAS’ Project Greenprint.
Since the announcement of NovA! in November 2021, 16 members have joined the NovA! consortium.
This includes Aicadium, Bank of China, Citi Singapore, DBS Bank, Deutsche Bank Aktiengesellschaft, HSBC (Singapore Branch), Jones Lang Lasalle (Singapore) Property Consultants , MUFG Bank, National University of Singapore – Asian Institute of Digital Finance, OCBC, Reluvate Technologies Private Limited, Shanghai Pudong Development Bank Co., Ltd. Singapore Branch, Standard Chartered Bank (Singapore), Sumitomo Mitsui Banking Corporation, Temasek, and UOB.
A core team within the NovA! consortium will lead the development of the ESG use case and they will release a demo version of it during the Singapore Fintech Festival 2022 in November.
In early 2023, a beta version will be released for testing by FIs, followed by further fine-tuning for eventual industry adoption of the solution while a white paper documenting the product design and AI features will be published in mid-2023.
Sopnendu Mohanty, Chief Fintech Officer, MAS said,
“NovA! will provide a valuable tool to help FIs generate prompt and actionable insights using structured and unstructured datasets and advanced computing.
This will better enable financial institutions to direct financing towards sustainable projects and companies that meet sustainability performance targets.”