There are still many unknowns surrounding the actual application of generative artificial intelligence (genAI) in financial services. But one thing is clear – AI has no boundaries; it is advancing at an unprecedented speed; and its impact is revolutionary, said Eddie Yue, chief exec of the Hong Kong Monetary Authority, in a recent speech.
“No single party – be it a public or private entity – can deal with all the challenges alone. We must foster public-private partnerships and international collaboration to leverage the collective wisdom of all stakeholders,” he said.
Yue highlighted the recent launch of a new genAI sandbox in collaboration with Cyberport, one of the digital technology flagships in Hong Kong. With this sandbox, banks can test out new ideas within a risk-managed framework, supported by timely supervisory feedback and essential technical assistance. This allows banks to thoroughly assess the feasibility of use cases and make iterative adjustments before full-scale implementation.
“The iterative approach also enables us to identify new risks that could threaten the broader financial system at an early stage, so we can develop and implement targeted safeguards in a timely manner,” he said.
There are four key areas related to AI applications that are closely monitored by the international regulatory community, he added: operational risk, fraud, customer protection, and the broader impact of AI on the economy.