BC creates Center of Excellence for Data Science and Artificial Intelligence

On August 15, 2024, the Central Bank of Brazil (“BC”) published Resolution BCB No. 408/2024, which establishes the Center of Excellence for Data Science and Artificial Intelligence (“CDE IA”), as provided for in its annexed regulation. With a view to developing new technologies and fostering the use of data and artificial intelligence within the agency, the BC established what it describes as a “community of practices of a propositional and consultative nature”, whose focus is aligned with the pillars of innovation and efficiency that support the Brazilian National Financial System (“SFN”), as well as with the deepening of prudential regulation.

According to BCB Resolution No. 408/2024, the CDE IA is responsible for proposing to:

• The Information Technology Department (“DEINF”): (i) the governance guidelines for the safe and ethical use and development of software services based on data science and artificial intelligence within the BC; (ii) the requirements for generative artificial intelligence products and services to be used within the BC; and
• The Department of People Management, Education, Health, and Organization (“DEPES”): (i) the permanent program encompassing training initiatives in data science and artificial intelligence.

As far as its structure is concerned, the CDE IA will have (i) a coordinator and an alternate, both appointed by DEINF; (ii) a technical leadership – appointed by the heads of office or equivalent members –, formed by up to two servants with experience in data science and artificial intelligence within BC’s departments, who must also be members of the CDE IA; and (iii) other member servants (without limitation as to the number) integrating the BC’s components – who can participate upon awareness and approval by their immediate leaders – to carry out the tasks assigned to the CDE IA.

A contribution agreement must be established regulating the effective participation of all members by the coordinator and technical leadership of the CDE IA (“Leading Members”), who will assign the corresponding tasks within the powers of DEINF and DEPES to the other members, prioritizing, monitoring, and validating them. In addition, annual targets for CDE IA will be implemented along with specific methods for monitoring it.

The Leading Members will also be responsible for:

• Providing information: (i) annually to the Governance, Risks, and Controls Committee (“GRC”), using a report on the work performed and the targets met; and (ii) to DEINF, DEPES, and other departments integrating the BC, whenever requested; and
• Establishing and publishing: (i) the schedule for ordinary monthly follow-up meetings; (ii) the methods for calling extraordinary meetings; and (iii) the quorum for meetings, with partial or full attendance.

Regarding the drafting and performing of the assigned tasks, it will be the sole responsibility of the coordinator to settle conflicts between members – seeking consensus among the technical staff involved – and, within their powers, to decide on situations not provided for in the corresponding regulation.

Also, from the perspective of the agenda aimed at fighting financial fraud and gains in terms of inclusion, lower intermediation costs, and competition, the CDE IA comes across as promising, given that the agency strengthens its decision-making capacity, data protection, and content generation while reducing errors and improving the data analysis process within the financial services industry.

In doing so, the BC continues its journey towards digitalizing financial intermediation by increasing banking efficiency and monetizing data, with a focus on technological innovations applied to the SFN.

BCB Resolution No. 408/2024 will enter into force on September 01, 2024, and is available on the BC’s website.

Demarest’s Banking and Finance team is available to provide any further clarifications on the topic as may be necessary.