The Monetary Authority of Singapore (MAS) has announced the first use case of an artificial intelligence (AI) tool to assist financial institutions (FIs) in evaluating the sustainability performance of the country’s real estate sector.

Called NovA!, the solution reduces the amount of time it takes for FIs to collect, process, and analyze data. It uses natural language processing (NLP) to automatically extract relevant information from documents, thereby reducing the overall cost of operations.

NovA! is part of Singapore’s National Artificial Intelligence Programme in Finance, which is aimed at helping FIs exploit AI to generate insights on financial risks. In the initial phase, the programme will focus on enhancing FIs’ ability to assess companies’ environmental impact and identify emerging environmental risks 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, the tool will assist FIs to set appropriate sustainability performance targets (SPTs) for the borrowers, by comparing their SPTs with the industry benchmark generated by means of AI.

And 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.

MAS’ chief fintech officer Sopnendu Mohanty says: “NovA! will provide a valuable tool to help financial institutions generate prompt and actionable insights using structured and unstructured datasets and advanced computing. This will better enable FIs to direct financing towards sustainable projects and companies that meet sustainability performance targets.”

Since the announcement of NovA! in November 2021, 16 FIs have joined the NovA! consortium, with a core team leading the development of its environmental, social and governance (ESG) use case.

The core team is expected to release a demo version of NovA!’s ESG use case during the Singapore Fintech Festival 2022 in November. In early 2023, a beta version will be released for testing by FIs, followed by further finetuning for eventual industry adoption of the solution. A white paper documenting the product design and AI features will be published in mid-2023.