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The Hong Kong Monetary Authority (HKMA) has released new guidelines on the use of generative artificial intelligence (AI) in consumer-facing applications, aiming to protect end-users and ensure responsible AI deployment across the financial sector.
In a recent circular directed at authorized institutions, primarily banks, the HKMA introduced updated principles to its existing framework for big data analytics and AI, initially established in November 2019. These guidelines focus on governance and accountability, fairness, transparency and disclosure, and data privacy and protection.
Expanded Principles for Generative AI in Banking
Alan Au, the executive director of the HKMA’s banking conduct department, emphasized the rapid adoption of generative AI among banking institutions, particularly in customer-facing applications. He highlighted potential uses such as customer chatbots, personalized product and service development, targeted sales and marketing, and robo-advisors in wealth management and insurance.
Given the growing use of generative AI in these areas, Au recommended several new principles to enhance consumer protection. Key among these is the need for transparency, ensuring that end-users are provided with clear and understandable disclosures about AI-driven services.
The HKMA also underscored the importance of accountability, expecting boards and senior management to take full responsibility for decisions related to generative AI implementation. Additionally, the guidelines call for generative AI models to deliver fair and consistent outcomes, reinforcing the need for ethical AI practices in consumer-focused applications.
Protecting Consumer Data and Privacy
A critical aspect of the HKMA’s new guidelines is the safeguarding of customer data. The authority has advised banks and other financial institutions to prioritize data protection measures, ensuring that generative AI tools do not compromise the privacy and security of consumer information.
Hong Kong Launches GenAI Sandbox for Financial Institutions
In a related development, the HKMA launched a Generative Artificial Intelligence (GenAI) Sandbox for the financial sector on August 13, in partnership with Cyberport, a government-backed technology company.
The GenAI Sandbox serves as a testing ground for exploring the potential of AI in finance, with applications ranging from risk management and anti-fraud measures to customer service and process reengineering. Carmen Chu, the executive director at the HKMA, explained that the sandbox is designed to address both technical and regulatory challenges in adopting generative AI.
“This new sandbox aims to overcome the ‘hard’ and ‘soft’ barriers to the adoption of GenAI, including the demand for computing capabilities and the need for supervisory guidance,” said Chu.
The GenAI Sandbox aims to empower banks to pilot innovative generative AI use cases within a controlled, risk-managed environment, supported by essential technical assistance and supervisory feedback.
With these new guidelines and the introduction of the GenAI Sandbox, Hong Kong is taking significant steps to ensure the responsible deployment of generative AI in the financial sector, balancing innovation with consumer protection.
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