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October 28, 2024Hong Kong FSTB Unveils AI Policies to Enhance Financial Services
The Hong Kong Financial Services and Treasury Bureau (FSTB) has announced new policies aimed at enhancing efficiency, security, and customer service in the financial services industry through the responsible use of artificial intelligence (AI). On October 28, the FSTB outlined its vision for AI adoption, emphasizing the importance of balancing innovation with risk mitigation.
A Dual-Track Approach
Recognizing the potential of AI, the FSTB advocates for a “dual-track approach” to foster its development while addressing the challenges that may arise. This approach encourages collaboration between the government, financial regulators, and service providers to ensure responsible AI integration in the industry. The report noted:
“After all, it is a balancing act – capturing opportunities and mitigating risks.”
Identifying Opportunities with AI
The FSTB identified six key opportunities for next-generation AI applications, including:
- Research and Data Analysis
- Investment Strategy Development
- Enhanced Customer Service
- Automated Risk Assessment
- Crime Detection and Prevention
- Workflow Automation
Currently, AI is already in use across various sectors in Hong Kong, including banking, securities, insurance, accounting, pension fund management, and green initiatives.
To address the potential risks associated with AI adoption, such as job displacement and intellectual property protection, Hong Kong will develop a supervisory framework. This framework aims to safeguard the interests of all stakeholders involved in the financial services ecosystem.
Upcoming Clarifications from the SFC
In addition to the FSTB’s policies, the Securities and Futures Commission (SFC) of Hong Kong is set to release a circular in November detailing the regulations and risks related to AI adoption. Recently, the SFC has also sought input from stakeholders regarding a new licensing regime for cryptocurrency over-the-counter (OTC) services.
According to a report from the South China Morning Post, the SFC and the Customs and Excise Department (C&ED) will oversee companies providing crypto OTC trading, enabling Hong Kong users to buy and sell cryptocurrencies privately. Initial proposals suggested that regulation of crypto OTC services would fall solely under the C&ED, highlighting the evolving regulatory landscape in Hong Kong.
The FSTB’s proactive approach to integrating AI into Hong Kong’s financial services sector signals a commitment to innovation while prioritizing safety and security. As the regulatory framework develops, it will be essential for stakeholders to remain engaged and adaptable to ensure the successful adoption of AI technologies in the financial industry.
