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SupTech starts with data: Building strong and flexible data foundations

Posted on by harshita

“Regulator blames lack of timely data reporting for recent multi-million-dollar losses in the banking sector.”  

This stark headline on HSBC’s GBP-57.4 million fine reveals an unpalatable reality: Even the world’s major banks, equipped with advanced systems, can suffer costly outcomes due to gaps in data accuracy and reporting. Failure to properly identify eligible customer deposits has exposed significant weaknesses in data handling, which has led to heavy regulatory penalties and hurt customer trust. 

Such challenges multiply in developing or underdeveloped countries that have weaker data infrastructure and less mature supervisory technologies. Here, the risks compound and make financial stability even harder to safeguard.  

This is precisely where supervisory technology, or SupTech, can emerge as a panacea. It uses analytics to transform messy, incomplete data into clear, actionable insights that help regulators and firms spot threats and manipulations faster than traditional, manual methods. 

A leading example is Singapore’s Monetary Authority, which developed “Apollo,” an AI-powered system that analyzes vast volumes of trading data to detect subtle patterns of market manipulation that humans often miss. Apollo learns from expert investigators, which allows regulators to focus on the riskiest cases and illustrates how AI-driven SupTech reshapes market supervision. However, even the most advanced solutions depend fundamentally on high-quality data. Without timely, consistent, and complete data, these tools cannot yield reliable insights. 

For regulators, especially in emerging markets, strong and adaptable data systems are imperative and serve as the very foundation of effective, future-ready financial supervision that can prevent crises and protect markets. 

Global adoption: Steady progress but uneven readiness 

While SupTech adoption is increasing worldwide, progress remains uneven. MSC’s work with regulators across Asia-Pacific and Africa shows that while many authorities are interested, their level of readiness varies. A Cambridge SupTech Lab’s 2024 survey shows that 75% of advanced economy regulators and 58% of emerging market authorities now use one or more SupTech or RegTech tools, a gap that has narrowed from 25% in 2023 to 17% in 2024. But behind these encouraging numbers lies a deeper challenge, the unequal readiness of data systems that underpin SupTech initiatives. 

MSC’s country-based studies reveal that many lower-income nations are still in a transitional stage of digital supervision, where some automation exists but manual processes continue to dominate. In the Pacific region, for example, several central banks have launched pilot dashboards for data analysis, but much of the input still comes from manual submissions and non-standard templates. This limits both scalability and consistency. 

Our diagnostics also show that weak digital infrastructure, inconsistent data definitions, and unclear data governance frameworks are often bigger obstacles than funding. In short, the adoption of SupTech tools does not always mean being ready for them. In this context, “ready” refers to the availability of robust data foundations, including clarity, consistency, quality, and  governance of data. Many regulators may have access to these systems but lack the data foundations needed to use them effectively or expand them sustainably. 

Robust and integrated data systems are the foundation upon which effective SupTech supervision is built, powering automation, real-time oversight, and risk-based actions as shown below.

Why strong data systems matter 

SupTech begins with technology, but its true power depends on data, and that is where the foundation for effective supervision is built. Strong data systems sit at the heart of every effective supervisory function. They process high-frequency granular information automatically, detect risks the moment they surface, and give supervisors the confidence to act based on hard evidence. They ensure that every regulated entity reports consistently and comparably, and that sensitive information is stored securely while remaining accessible to those who need it. 

Table 1: Varying data requirements of supervisory functions 

Core challenge: Weak data foundations 

Across less digitally mature markets, MSC’s data maturity assessments have identified three interlinked gaps that frequently delay SupTech transformation. Figures based on MSC’s data are derived from direct surveys of Pacific Island regulators conducted in 2023 as part of our data maturity assessment work. Cambridge figures are cited for global context. While these overlap with global patterns described in the Cambridge SupTech Lab’s work, our regional evidence provides sharper insights into their practical consequences.  

Data quality gaps 

Manual and spreadsheet-based reporting still dominate. MSC’s Pacific SupTech readiness survey (2025) found that one-third of regulators rely on manual submissions. This finding echoes Cambridge’s 2023 global trend, which shows more than half of authorities still handle manual data and nearly three-quarters validate it manually. These overlapping findings underscore how poor-quality and manual data weakens supervisory confidence and delays risk detection. 

Lack of standardization 

MSC’s diagnostics across small islands and low-income economies show that few regulators have consistent taxonomies or standardized data dictionaries across departments. While only 14% of regulators globally report full data standardization, the figure drops even lower, below 10%, in smaller jurisdictions that depend on legacy reporting formats. The absence of common definitions forces supervisors to clean and reconcile data after submission, which slows decision-making, undermines cross-entity comparisons and systemic risk analysis, and makes it inefficient or impossible. As a result, any SupTech solution built on this data risks being weakened. 

Infrastructure constraints 

Even as some authorities explore cloud-based SupTech pilots, in-house or private server storage still accounts for more than half of supervisory data systems in the Pacific, as per MSC’s research. This reliance on in-house systems protects confidentiality but creates silos that block data sharing and integration with modern analytics tools.  

While Cambridge reports low global adoption of cloud storage (31.5%), MSC’s Pacific survey reveals a significant and continued dependence on in-house and private servers across the region, which sometimes exceeds 50% in individual countries. These regional figures may appear to contradict global studies, but they are consistent when viewed in terms of maturity. Many jurisdictions remain at the transitional stage, where cloud experimentation has begun, but full adoption is still limited. 

Why a direct jump to SupTech is risky 

The temptation to invest in the latest tools is understandable. MSC’s research, supported by findings from CCAF and OECD, shows that technological investments often underperform when built without solid data foundations. Ineffective systems yield unreliable results, exhaust critical institutional resources, and heighten exposure to operational and reputational vulnerabilities. In the absence of dependable data, even the most advanced SupTech initiatives can turn into costly trials. 

Therefore, the data shows that before regulators allocate funds to advanced SupTech platforms or infrastructure, they should follow a gradual, capability-based strategy aligned with the maturity of their data ecosystems. The gradual implementation of SupTech solutions promotes smoother implementation, enhances value realization, and prevents costly setbacks. Without this foundation, institutions risk pouring resources into advanced technologies without addressing core weaknesses in data systems, which would ultimately drain institutional capacity and weaken the stability of the financial system. 

In our next blog, we will explore the building blocks of effective data systems and MSC’s framework, which defines what constitutes basic, intermediate, and advanced maturity levels, and showcase how central banks use these stages to implement scalable and future-ready SupTech solutions.

Advancing financial supervision: Best practices in SupTech and RegTech

Posted on by Adityaraj

The report explores how SupTech and RegTech are modernizing financial supervision through automation, analytics, and AI to improve compliance, risk management, and consumer protection. The report draws on global case studies, from the Bank of England to Rwanda and the Philippines, to illustrate practical innovations that strengthen regulatory efficiency and inclusion.

It also presents a five-step adoption framework and strategies to address challenges, such as data privacy, legacy systems, and resource constraints, to promote resilient, technology-enabled regulatory ecosystems.

Unlocking smart supervision in the Pacific

Posted on by Adityaraj

The report “Unlocking Smart Supervision in the Pacific” provides a detailed analysis of current regulatory technology readiness among Pacific Island central banks, which identifies institutional, legal, and technical gaps. The report proposes a phased rollout of a collaborative, modular SupTech solution governed by regulators.  The solution is designed to automate data collection, enhance risk-based supervision, and support financial inclusion. This approach emphasizes regional cooperation, cost efficiency, and sustainable innovation. The report seeks to build resilient regulatory frameworks with a measurable impact within two years. 

 

How locally-led adaptation can make the inherent resilience of MSMEs in Uganda’s cattle corridor bankable

Posted on by Adityaraj

Godfrey is not alone. Uganda’s MSMEs and farmers form the but struggle with the growing impacts of climate change. Droughts are now more frequent and prolonged, which disrupts rain-fed farming and pastoral systems. The 2010–2011 drought alone led to losses worth USD 1.2 billion, which is approximately 7.5% of Uganda’s GDP. In the cattle corridor districts of Nakasongola and Masindi, drought consistently ranks as the most severe hazard, as it dries up water points and destroys pastures. Recurrent drought also causes slow-onset impacts, such as land degradation and desertification, which strip pastures, exhaust soils, and depress future productivity.

For lenders, these shocks drive arrears, delay repayments, and distort credit demand. The default strategy in such conditions is to withdraw from the market. However, they reveal a pathway for innovation, which includes adaptation efforts to generate finance opportunities if lenders can design products aligned with seasonal shocks and recovery periods.

This is where locally-led adaptation measures become crucial. Part one of this series showed how community-level LLA tools help households map hazards and cocreate adaptation options. This second part shifts the focus to the middle tier of MSMEs and their lenders. MSMEs are often banked and have cash flows with repayment capacity, which allow lenders to underwrite adaptation investments. They anchor value chains and provide crucial market services, yet remain climate-exposed.

MSC’s LLA toolkit for IFSPs (LLA-IFSP toolkit) is built for this tier. It enables lenders to trace climate impact pathways across household journeys, from hazards and vulnerabilities to impacts on livelihoods and supply chains that include inputs and outputs. Lenders can adjust product structures and translate MSME insights into phased, financeable plans.

Against this backdrop, MSC partnered with FINCA Uganda to pilot its LLA-IFSP Toolkit. The exercise exposed material climate risks in FINCA’s portfolio, which clarified client adaptation needs, and generated product concepts that aligned with seasonal cash flows. It highlighted climate change as a risk to manage and an opportunity to expand the customer base. This approach could improve portfolio quality, de-risk existing lending, and place climate risk at the core of the ESG strategy.

Preparation is the key

Before the application of the toolkit, secondary research is vital to understand the nature of climate risks and past activities in the locality. This requires a deeper examination of the current climate hazards and impacts, which are expected under different representative concentration pathways (RCPs) and shared socioeconomic pathways (SSPs). This knowledge will be essential for the discussion of future climate scenarios with participants in the field-based exercises.

Insights from the toolkit

Tool 1: Supply-side risk analysis

The tool highlighted how drought stresses FINCA’s loan book. The findings were stark, as approximately 25% of FINCA’s clients are in climate-sensitive sectors. During droughts, these borrowers consistently missed one to two installments per cycle. This pattern increased PAR≥30 by 0.5–1%, with projections that suggest it could double to 1–2% within three years.

The data revealed that recovery is possible. Post-event loan cohorts appeared significantly cleaner, which shows that the problem is not weak underwriting or poor repayment culture, but the strain the households faced during droughts. Grace periods and moratoriums can give clients the time they need to recover.

Subsequent tools (2-7) that were implemented in the field comprised:

Tool 2: Mapping climate hazards

Participants use this tool to identify climate-hazard-prone zones and track changes in hazard patterns. Here, farmers rated drought severity as “five out of five.” They reported longer dry seasons. The farmers explained how enclosures and new veterinary rules hindered coping strategies, such as relocation of cattle to lakes.

Tool 3: Vulnerability assessment

This tool used the DFID’s sustainable livelihoods framework to map resilience across five capitals, which reveals the fragility of rural households when droughts strike.

  • Natural capital erodes as water sources dry up, pasturelands degrade, and elevated temperatures reduce crop and livestock productivity.
  • Physical capital has also degraded. Kraals, the wooden enclosures that protect cattle, collapse under drought stress and termite damage, which causes livestock to escape. This results in fines for encroachment on private land.
  • Financial capital is razor-thin. Most farmers work with little savings and limited access to credit, which hinders recovery after a single failed season. VSLAs and informal lenders are unable to support large-scale investments in adaptation.
  • Social capital remains essential, but it has limits. Neighbors share small amounts of fodder or drugs with each other. Yet, such help is limited in scale and cannot sustain households through prolonged and widespread shocks.
  • Human capital is under immense stress. Drought dries up fields, water sources, and pastures. Hired laborers and men often migrate in search of work, which leaves women and children to shoulder additional burdens.

Tool 4: Climate-related impacts

Participants analyze how climate hazards interact with vulnerabilities to create direct and indirect impacts. They trace impacts through value chains, which reveals the ripple effect. Direct impacts include crop failures, storage losses, livestock stunting, and livestock mortality. Meanwhile, indirect impacts include lost contracts, inflated input prices, reduced access to formal and informal credit, and reputational damage.

Tool 5: Adaptation options currently

This tool looks at how MSMEs have already adapted to climate stress and whether those strategies are sustainable. It helps distinguish between temporary coping mechanisms that merely keep businesses afloat versus genuine adaptation that builds their long-term resilience. An assessment of coping strategies revealed that farmers sought short-term fixes. The farmers adjusted feed times and shifted meals to cooler hours of the day so animals could withstand heat stress. They purchased additional grass, often at high cost, to replace depleted pasture. They also hand-carried water to livestock, a labor-intensive task to compensate for dried-up sources. These measures kept animals alive in the immediate term but placed heavy burdens on household labor and savings.

Tool 6: Prioritization

Participants brainstorm and evaluate potential adaptation options based on availability (is it technically feasible?), accessibility (can we implement it?), and affordability (can we sustain it?). This ensures that final plans reflect realistic, context-appropriate solutions rather than wishful thinking.

In practice, the prioritization exercise revealed a sharp divide. Farmers consistently ranked long-term investments, such as boreholes, feed stores, and fencing, as suitable measures to tackle droughts. Yet, they also considered these options the least feasible, as finance was out of reach.

The MSMEs are not short on ideas, discipline, or clarity. These enterprises know what works and can develop detailed, budgeted roadmaps for adaptation. Yet, well-designed plans fail to take off without suitably designed financial products and models or incentives that can make these adaptation assets bankable.

Tool 7: Farmer’s adaptation plans

The process culminates in a detailed action plan that specifies activities, milestones, timelines, costs, funding sources, and responsible stakeholders. Farmers presented strong and implementable plans, which include boreholes to secure water, feed stores to stabilize nutrition, and fencing to protect cattle, among others. These plans also included suppliers, installation details, and seasonal repayment calendars that match cash flows. Despite strong business cases, no plans were accepted due to credit ceilings or perceived risk.

The path forward

The pilot highlights the urgent need for inclusive financial service providers to adapt their products and processes to meet the resilience needs of farmers.

  1. Redesign loan products
    • Introduce seasonal repayment schedules aligned with harvest or livestock fattening cycles
    • Develop phased lending that supports long-term investments in manageable tranches
  2. Recognize adaptation as bankable
    • Treat investments such as boreholes, feed reserves, and veterinary certification as productive assets
    • Bundle credit with adaptation services such as insurance, agronomic advice, and input supplier linkages
  3. Manage portfolio risks
    • Mainstream climate risk into credit assessments and provisioning
    • Use early warning systems and local data to predict repayment challenges
  4. Partnerships and funding
    • Mobilize concessional finance, guarantees, and parametric insurance to de-risk adaptation lending
    • Partner with development agencies, insurers, and technical experts to support farmers with credit.

A path from risk to resilience

MSMEs are at risk when labeled as “climate risky” without changes in how finance is delivered. This approach could cut MSMEs off from credit entirely when they need it most. In such cases, climate finance that focuses on risk recognition without product redesign leads to exclusion, rather than resilience.

The LLA toolkit helps avoid this trap. It shows lenders how to lend differently and not less. Lenders can align repayment terms with seasonal hazards. They treat adaptation assets, such as boreholes and feed stores, as bankable, and phase credit to manage exposure. Consistent with this toolkit, FINCA Uganda is committed to equip its customers with practical, user-friendly tools and resources to adopt a customer-centric approach in product design and delivery.

This change in approach acknowledges that farmers are not passive victims of climate change but active participants who plan, invest, and adapt. However, what these farmers lack is financial support. As a result, financial institutions can protect their portfolios. This approach enables MSMEs to adapt and demonstrate that climate resilience is not only necessary but also financially viable.

For Godfrey, this means he can have a borehole that keeps his herd alive. For FINCA, it means arrears that stabilize and a portfolio that holds. For both, it means resilience in the face of harsher seasons.

Ethiopian government delegation visits India for learning exchange on NRLM

Posted on by Adityaraj

A high-level delegation from the Government of Ethiopia is undertaking a week-long learning and exposure visit to India to study the operational model and implementation strategies of the National Rural Livelihoods Mission (NRLM), India’s flagship program for poverty alleviation and women’s economic empowerment.

The visit, organized by the Ministry of Rural Development (MoRD), is centered on facilitating peer learning on how the NRLM has successfully mobilized over 105 million women into more than 9 million Self-Help Groups (SHGs), establishing a massive, resilient community-driven financial inclusion network.

Mission Scale and Financial Impact

Since its launch in 2011, the NRLM has been instrumental in creating one of the world’s largest community-driven development programs. A key area of interest for the Ethiopian delegation is the scale of financial inclusion achieved:

Women SHGs have accessed ₹11 Lakh Crore (Rupees Eleven Lakh Crore) in formal financial institution loans since 2013-14. This demonstrates the program’s success in building robust, scaled access to finance and sustainable livelihood ecosystems.

Delegation and Learning Objectives

The Ethiopian delegation is led by Ms. Sintayehu Demissie Admasu, Head of the Food and Security Coordination Office (FSCO), Ministry of Agriculture, Ethiopia. The delegation also includes senior officials from the Ministry of Women and Social Affairs, Disaster Risk Management and Food Security Commissions, and Regional Food Security Offices, along with representatives from the World Bank’s Social Protection and Livelihoods Team.

The exposure visit, spanning five days across New Delhi, Alwar, and Jaipur, will provide firsthand insights into NRLM’s evolution, policy architecture, institutional structure, and field-level implementation. The delegation will focus on the following key areas:

Policy and Governance

Understanding the policy vision and institutional framework driving the NRLM’s success.

Field Implementation

Practical observation of Self-Help Groups (SHGs), Village Organizations (VOs), Cluster Level Federations (CLFs), and Farmer Producer Organizations (FPOs) in Rajasthan.

Livelihood Models

Detailed study of how rural women collectively manage funds, engage in livelihood enterprises, and utilize digital tools for empowerment.

Speaking on the visit, Shri T. K. Anil Kumar (IAS), Additional Secretary, Ministry of Rural Development (MoRD), Government of India, emphasized the spirit of global partnership:

“This exchange reflects the power of South-South learning and the opportunity that India’s experiences offer to the rest of the world in leveraging community-owned and community-driven platforms for large-scale progress and inclusive development. India stands ready to share its proven, scalable models that enable other nations to adapt lessons from the NRLM platform for empowering rural women and reducing poverty.”

The Ethiopian delegation highlighted the transformative potential of the learning:

“India’s NRLM offers valuable lessons in how collective action, financial inclusion, and local governance can transform rural economies,” said Ms. Sintayehu Demissie Admasu. “Through this partnership, we aim to translate India’s success into practical strategies that strengthen Ethiopia’s rural livelihoods systems.”

The visit reinforces India’s commitment to sharing its successful development experiences with global partners.

This article was first published on “Press Information Bureau Government of India” platform on 28th October 2025.

Driving Women’s Empowerment and the Economy, One Chat at a Time

Posted on by Melya Findi Astuti

Social commerce sellers have emerged as Indonesia’s new entrepreneurs. They pop up constantly in our social media feeds, selling everything from traditional snacks and handmade crafts to clothing and beauty products. Marketing their products through social media platforms like WhatsApp, Facebook and Instagram, they reach buyers directly through personal chats, one conversation at a time. Unlike formal e-commerce platforms, these sellers do not run online stores or manage complex logistics. Rather, they build relationships based on trust, timing and genuine personal connections.

For many women, social commerce offers an accessible way to earn income while balancing household and care responsibilities. With just a smartphone, they turn social media platforms like WhatsApp and Instagram into digital storefronts, showcasing creativity and resilience despite limited resources. The flexibility of this model allows them to stay in control of their time and income, making social commerce an important source of empowerment.

Taken together, social commerce sellers in Indonesia manage billions of dollars in merchandise, representing a rapidly growing subset of the country’s ecosystem of micro-, small and medium-sized enterprises (MSMEs). In fact, Indonesia is one of the world’s most active social commerce markets. In 2023, the country ranked sixth globally for active consumers, with 86% of Indonesians using social media platforms to transact. Women make up the majority of social commerce sellers: 64% of MSMEs in Indonesia are women-led and new entrants to social commerce are more than twice as likely to be women than men. The social commerce sector thus serves as a critical entry point for women’s economic participation.

Challenges faced by social commerce sellers

Despite their economic importance, social commerce sellers remain at the margins of policy conversations, financial services design and digitalization programs. Most also remain outside the reach of formal finance. They tend to face fraud risks, lack business training and rarely qualify for structured credit. Because most sellers are women, this exclusion reflects broader patterns of economic marginalization, where women’s informal and home-based enterprises are often undervalued and overlooked in formal support systems.

To better understand their challenges and needs, MSC (MicroSave Consulting) conducted a study of 458 social commerce sellers in seven provinces in Indonesia. Through this research, we identified four types of sellers who represent the unique journeys and needs of this group.

Four personas of social commerce sellers

For each of the four personas we developed, we looked at their characteristics as well as the limitations or challenges which might be holding their businesses back. This exercise helped us identify potential solutions for improving social commerce sellers’ incomes and resilience.

The Digital Explorer: Fitri sells homemade snacks through WhatsApp. She is curious about digital tools but feels overwhelmed. Fear of online fraud and debt keeps her from expanding her presence or applying for capital. With a small customer base, she values stability over fast growth.

  • Potential solutions: Fitri would benefit from bite-sized digital training and flexible community-based financial products.

The Community Nurturer: Ratna runs a handicrafts business. She mostly serves local customers and prefers face-to-face sales or WhatsApp chats with people she knows. Formal banking feels impersonal, so she relies on informal networks such as an arisan.

  • Potential solutions: She could grow her business with support that matches her pace, such as easy-to-use catalog apps and community-based savings and loan products designed for informal sellers.

The Market Observer: Rina sells household goods through WhatsApp Business and Facebook. She has built a solid customer base and is open to credit but avoids unclear loan terms with hidden fees. She prefers small, manageable steps towards growth.

  • Potential solutions: Low-risk microcredit and practical social media training could help Rina scale her business.

The Digital Hustler: Siti runs a fast-paced business across multiple platforms. She is ambitious and trend-savvy but lacks structure. She takes risks with credit and supply, often struggling with cash flow and profit tracking.

  • Potential solutions: Tools for inventory and cash flow management, as well as digital bookkeeping apps that help track income and expenses across platforms, could help make Siti’s business more sustainable.

Seeking solutions to the challenges faced by social commerce sellers

These four personas highlight the complexity of social commerce. The tools they use may be digital, but the challenges are deeply human. Solutions must be empathetic and tailored. Current programs often focus on onboarding MSMEs to formal e-commerce platforms, but that is not always what sellers want or need. Social commerce offers personal relationships, flexibility and control. Support should build on these strengths rather than steer sellers elsewhere.

Our research identified three key areas of support needed for social commerce sellers:

1) Formalization must offer clear benefits. Our study found that only 18% of surveyed sellers had a business registration number. Some unregistered sellers already track sales, manage inventory and access small amounts of credit, but the majority remain excluded from formal finance. For many, formalization feels like added bureaucracy without clear benefits. To encourage more sellers to formalize, registration must bring real advantages. It should provide priority access to credit, eligibility for government programs, or customized business support that fits the realities of women-led enterprises operating from home.

2) Platforms should enable easier transactions. Selling today is fragmented. Sellers chat on one app, transfer money on another, confirm through screenshots, arrange delivery separately. The process is clunky and prone to drop-offs. Sellers need smoother systems that integrate product listings, communication and payments. To address this issue, social media platforms, financial service providers and logistics partners will need to develop tools that streamline everyday transactions. The goal is not to replicate e-commerce, but to improve tools sellers already use, especially for women entrepreneurs who value flexibility and need ways to reduce friction in their sales process.

3) Trust must be reinforced. Trust is the foundation of social commerce but also its biggest risk. Sellers deal with fake orders, late payments or disappearing buyers. Customers worry about scams, fake products or unclear return policies. Unlike e-commerce, social media platforms lack protections. Sellers ask for trust features, such as verified profiles, secure payments and dispute resolution. These measures would not only make social commerce more reliable for all, but also provide greater safety for women sellers, who are disproportionately affected by online scams and harassment.

A path to inclusive growth

Indonesia’s social commerce sellers represent a powerful force for inclusive economic growth and women’s empowerment. To unlock their full potential, they need solutions that respond to their unique realities as women in a digital marketplace with limited time, informal work environments and reliance on trust-based relationships. Key solutions that can help them strengthen their livelihoods and grow their businesses include making formalization rewarding, improving platform design and reinforcing trust.

Social commerce sellers are already driving Indonesia’s digital economy. With the right support, they can also drive forward women’s economic empowerment, one chat at a time.

 

This blog post was originally published on the FinDev Gateway blog.