Hong Kong Introduces Strict Generative AI Guidelines for Banks to Protect Consumers
Hong Kong’s de facto central bank, the Hong Kong Monetary Authority (HKMA), has issued new guidelines for the use of generative artificial intelligence (GenAI) in consumer-facing banking applications. The move aims to safeguard end-users and ensure responsible adoption of this rapidly evolving technology.
In a circular to authorized institutions, primarily comprising banks, the HKMA has introduced several key principles that firms must adhere to when deploying GenAI. These principles build upon the regulator’s previous guidance on big data analytics and AI, introduced in 2019.
The new guidelines emphasize the need for robust governance and accountability, with the board and senior management responsible for all GenAI-driven decisions and processes. Firms must also ensure their GenAI models produce objective, consistent, and fair outcomes for customers, without leading to unfair bias or disadvantage.
Transparency and disclosure are other crucial aspects of the HKMA’s framework. Banks are expected to provide clear and understandable information to customers about the use of GenAI, its limitations, and the option to opt-out where feasible. Additionally, strict data privacy and protection measures must be implemented when handling customer information through GenAI applications.
The HKMA’s move comes as the regulator has observed a surge in interest from the banking sector in adopting GenAI, particularly for customer-facing activities such as chatbots, product development, sales, and robo-advisory services. While current use cases are still primarily focused on internal business functions, the potential for broader consumer-facing applications is evident.
To further support the responsible adoption of GenAI in finance, the HKMA has also launched a “Generative Artificial Intelligence (GenAI) Sandbox” in collaboration with Cyberport, a state-run technology company. This platform aims to help banks pilot novel GenAI use cases within a risk-managed framework, with technical assistance and targeted supervisory feedback.
Hong Kong’s proactive stance on GenAI regulation underscores the city’s commitment to ensuring consumer protection keeps pace with the rapid technological advancements in the banking sector. As generative AI continues to evolve, the HKMA’s guidelines serve as a blueprint for other regulators globally to follow in safeguarding the interests of financial consumers.
