HKMA Outlines Principles for Application of Artificial Intelligence
HKMA sets out the high-level principles on the use of artificial intelligence based on sound industry practices and similar principles formulated by the leading overseas authorities. These principles have been set out in a recent letter that was issued to the Chief Executives of all authorized institutions. Banks are expected to take these principles into account when designing and adopting their artificial intelligence and big data analytics applications.
The twelve principles cover aspects related to governance, application design and development, and ongoing monitoring and maintenance. The principles convey the importance of using data of good quality, conducting rigorous model validation, ensuring an appropriate level of explainability of artificial intelligence applications, ensuring auditability of artificial intelligence applications, implementing effective management oversight of third-party vendors, and implementing effective cyber-security measures. Banks may apply the principles in a proportionate manner that reflects the nature of their artificial intelligence applications and the level of risks involved. As international regulatory standards and industry developments regarding the use of artificial intelligence are evolving rapidly, HKMA will keep these principles under periodic review and provide further guidance to banks as and when appropriate. HKMA plans to issue a separate guidance on the principles relating to consumer protection aspects involved in the use of artificial intelligence applications.
HKMA also conducted a survey, in the third quarter of 2019, on the use of artificial intelligence by banks. It is noted that many banks are adopting or planning to adopt artificial intelligence applications. The scope of the use of artificial intelligence is also expanding from customer-facing services (for example, chatbots and personalized marketing) to internal processes and risk management areas (for example, operational automation, cyber risk, and fraud risk management). Details of the survey results will be published soon.
Keywords: Asia Pacific, Banking, Artificial Intelligence, Big Data, Fintech, Guidance, Cyber Risk, HKMA
Previous Article
RBNZ Publishes Financial Stability Report in November 2019Related Articles
BIS Paper Studies Impact of Fintech Lending on Small Businesses in US
The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.
UK Regulators Issue CRR Changes and Stress Test Scenarios for Banks
The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).
EBA Launches EU-Wide Transparency Exercise in 2022
The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.
SRB on CRR Quick-Fix to Policy for Multiple Point of Entry Banks
The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."
EC Rule Lists Advanced Economies for Market Risk Capital Calculations
The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.
EBA Publishes Final Regulatory Standards on STS Securitizations
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
