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    HKMA Outlines Principles for Application of Artificial Intelligence

    November 06, 2019

    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

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