Hong Kong Monetary Authority - Opening Remarks at FiNETech2 on “Building Secure A.I. Ecosystem: A Blueprint for Strategic Adoption in Financial Industry”

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Opening Remarks at FiNETech2 on “Building Secure A.I. Ecosystem: A Blueprint for Strategic Adoption in Financial Industry”

Speeches

13 Aug 2024

Opening Remarks at FiNETech2 on “Building Secure A.I. Ecosystem: A Blueprint for Strategic Adoption in Financial Industry”

Carmen Chu, Executive Director (Banking Supervision), Hong Kong Monetary Authority

Good morning, everyone. A very warm welcome to the second FiNETech – Into the A.I.verse, where financial and technology experts network with each other again.

The video just now was fully generated by Artificial Intelligence (A.I.). It is not something that we would have imagined happening a few years back. Thanks to Libertify for this amazing opening video.

Today, we are witnessing a paradigm shift, where A.I. is no longer a futuristic concept but a powerful force that reshapes the industry as we know it. As we navigate this shift, a pressing question arises: Will Generative A.I. (GenA.I.) replace human beings in the workforce, particularly in the financial industry?

“GenA.I. can revolutionise the financial services industry by increasing efficiency, reducing costs, and enhancing customer experiences. It can automate document processing, provide personalised service, identify potential risks, offer predictive analytics, and assist with regulatory reporting. However, while A.I. can automate tasks with reduced costs, it is unlikely to completely replace humans in the far future. Human touch is essential in building strong relationships and effective communication with customers, requiring skills such as creativity, critical thinking, and problem-solving.

The deployment of GenA.I. also poses risks, such as bias and discrimination in decision-making, cybersecurity threats, lack of transparency, and dependence on high-quality data. To ensure responsible A.I. development and adoption, it is crucial to invest in education and re-skilling of human workers, fostering a culture of lifelong learning. By doing so, the benefits of A.I. can be shared by all, augmenting human capabilities, freeing up humans for more high-value jobs, and creating new opportunities.”

In fact, the preceding answer to the question about GenA.I. was crafted by the HKMA’s internal GenA.I. assistant, SARA. The ability to draft a coherent speech within seconds is also a commonly used feature of GenA.I.

While SARA’s answer encompasses many of the core concepts relevant to GenA.I. adoption, it has yet to fully grasp the nuances specific to the financial industry. This underscores the importance of “human touch”, which was also brought up by SARA. As we continue, I will delve into these nuances.

In terms of adoption, A.I. has become a critical tool for financial institutions seeking to enhance their operations and customer services. Recent advancements in generative models of machine learning and natural language processing such as the ChatGPT, Gemini, Co-pilot, to name a few, have pushed the boundaries of A.I. even further.

These models not only enable automated responses, but also simulations and even predictive scenarios, essentially anything that can be derived from language. In the financial industry, such capability holds great potential for enhancing risk management, expanding anti-fraud efforts and elevating customer experience.

However, as A.I. systems become more sophisticated and influential, we must ensure their ethical development and deployment, and the core principle of responsible innovation should also come to the forefront of considerations.

Alongside adoption, financial institutions must maintain dynamic yet robust guardrails that keep pace with the rapid advancements in technology and address the evolving risks associated with these innovations. This is where the role of risk management becomes paramount.

To foster innovation while mitigating potential risks, the HKMA and the Cyberport gladly announce our latest collaboration in launching the GenA.I. Sandbox.

This new sandbox aims to overcome the “hard” and “soft” barriers to the adoption of GenA.I., that is, the demand for computing capabilities and the need for supervisory guidance. It will provide a controlled environment for financial institutions and technology companies to jointly experiment with GenA.I. applications and obtain specific supervisory feedback.

With such a testing ground for new ideas, we will be more equipped to explore the potentials of GenA.I., study the impact of these technologies, identify potential vulnerabilities, and develop appropriate supervisory guidance before use cases are deployed widely in real businesses.

We encourage all banks to start considering how GenA.I. can be applied to their specific business needs and challenges. Detailed information about the sandbox, including eligibility criteria and the application process, will be announced in the coming weeks. We encourage interested parties to stay tuned and prepare for the opportunity to be at the forefront of this exciting new arena in financial technology.

Amidst this major wave of A.I. technology adoption, cross-sectoral collaboration and continuous learning will be key. Today's FiNETech offers a glimpse into the future, showcasing A.I.-driven innovations that could further energise the industry. In addition to this event, a number of other initiatives have been or will be launched in these few months to sustain the momentum, including a practical training focusing on A.I. adoption, a use case sharing video and a study report on practical aspects of GenA.I.

In closing, I would also like to express my gratitude to the Cyberport and the Fintech Association of Hong Kong for co-hosting this event, the Securities & Futures Commission, the Insurance Authority, the Mandatory Provident Fund Authority for their continuous support in promoting cross-sectoral Fintech adoption, to our distinguished speakers today for participating and sharing your valuable insights, and also to KPMG and Quinlan & Associates for powering this event.

The future of finance lies in the harmonious integration and NETworking of “Fin” and “Tech”. Let us proceed together, armed with a strategic and balanced approach of Fintech adoption, to create a smarter, more efficient, and more secure financial sector for all. I wish you all a productive and enlightening day in the A.I.verse. Thank you.

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