Hong Kong’s government outlined its first guidelines on the “responsible” use of artificial intelligence (AI) and embraced blockchain, as regulators strive to get ahead of the technological revolution that will almost certainly disrupt financial services.
“Blockchain and AI are the two fields of innovation in fintech”, Financial Secretary Paul Chan Mo-po said during the opening of the FinTech Week. “Hong Kong’s financial market is open and prudent towards the application of AI, [so] we will closely monitor the developments and draw on the experiences of the mainland and overseas” because the technology is “constantly evolving”, he said.
Banks, brokers, asset managers and any other financial institutions that wants to use AI “must formulate an AI governance strategy to provide direction on how [the] systems should be implemented and used, and offer advisory and training services for on-premise deployment”, the government said in a press release before Chan’s speech.
“The statement comes at a time when we are seeing increasing government policies and regulations on AI, such as the enactment of the European Union’s AI Act and the publication of [guidelines]” by Singapore, said Kenneth Hui, head of Hong Kong regulations at Simmons & Simmons, an international law firm.
AI has become the focus of FinTech Week, the annual event that has been hosted for nine years by InvestHK and Finoverse. This year’s conference, which runs from October 28 to November 1,, will emphasise Hong Kong’s role as the “connector” between international business and China, the world’s second-largest AI market behind the US. About 700 companies are exhibiting at the weeklong event, including SenseTime, Tencent Holdings and ByteDance.
The government intends to fully leverage Hong Kong’s advantages to bring together the mainland and international data as well as the free-flow of information to promote the use of AI in the financial sector for accelerating the development of new tools tailored to local conditions, Chan said.
The government intends to fully leverage Hong Kong’s advantages to bring together the mainland and international data as well as the free-flow of information to promote the use of AI in the financial sector for accelerating the development of new tools tailored to local conditions, Chan said.
Chan said he will encourage the industry to apply AI and seize opportunities, while also assessing and mitigating the risks of AI becoming the scammers’ tool. Scams nearly doubled in value last year in Hong Kong to HK$9.18 billion (US$1.2 billion), while the number of cases jumped 42.6 per cent to 39,824, putting the city of 7.5 million people at the top of the world in per-capita losses from fraud.
“We should not only focus on the benefits of AI, but also pay attention to potential challenges, such as cyberattacks and privacy,” Chan said.
Chan said Hong Kong is well placed to tap fintech opportunities arising from blockchain and AI, since the city accounted for two of the largest fintech transactions in the Asia-Pacific in the first six months, while the mainland accounted for three of the top five. The number of fintech and so-called Web3 internet companies rose 15 per cent from last year to 1,100.
To better understand AI, the Hong Kong University of Science and Technology (HKUST) will make its AI model, its computing resources and training available to Hong Kong’s financial services industry, Chan said. The HKUST was the highest-ranked local institution last year in data science, placing 10th globally in the QS Top Universities Ranking.
The Hong Kong Monetary Authority (HKMA) is working closely with the People’s Bank of China to establish a cross-boundary linkage between Hong Kong’s Faster Payment System (FPS) and the mainland’s Internet Banking Payment System (IBPS).
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