The Hong Kong government has unveiled its first guidelines on the practice of responsible use of artificial intelligence and embraced blockchain, as local regulators seek to stay ahead of the pace of the technological revolution, which is likely to disrupt financial services.
Blockchain and machine intelligence are two areas of innovation in the fintech sector. The corresponding statement was made by the Financial Secretary of Hong Kong, Paul Chan Mo-po on the opening of the FinTech Week. According to him, the local financial market is open and prudent towards the use of artificial intelligence. He also said that the Hong Kong authorities will closely monitor the developments and draw on the experiences of the mainland and overseas. Moreover, Paul Chan Mo-po noted that technology is constantly evolving.
In a press release issued by the Hong Kong government, it was stated that banks, brokers, asset managers, and any other financial institutions that want to use artificial intelligence should formulate an AI governance strategy to provide direction on how appropriate systems should be implemented and applied, offer advisory and training services for on-premise deployment.
Kenneth Hui, head of Hong Kong regulations at Simmon Simmons, an international law company, noted that the mentioned statements by the authorities were made at a time when there were increasing government policies and regulations in the area of artificial intelligence. The European Union’s AI Act and the publication of guidelines by Singapore were mentioned in the relevant context.
It is worth noting that the regulation of artificial intelligence is what can be described as a multifaceted issue. In this case, it is implied that the spread of AI as an impulse to impact the world as a political, social, cultural, and economic space has many dimensions, including, among other things, ethical and financial. Also, in the relevant context, it is worth noting that artificial intelligence is a source of significant force in a generalized abstract sense, having a digital form of embodiment that generates material results. AI is already being used as a workflow execution tool. Moreover, artificial intelligence can generate original media content. Also, machine intelligence can, in the course of its technological evolution, transform into a kind of autonomous virtual mind that exists parallel to human consciousness and surpasses it in terms of the level of cognitive abilities. Obviously, against the background of the already underway and potential capabilities of artificial intelligence, the issue of its responsible use will be relevant. First of all, the corresponding focus of attention is because AI, like any powerful technology, can be applied both within the framework of constructive scenarios aimed at achieving benefits and positive results and in the context of striving to implement destructive intentions, for example, in the area of cybercrime. Moreover, artificial intelligence contains the potential for a large-scale transformation of the world as a space for the being of human civilization. Against this background, it is logical for governments to regulate the AI area to avoid the potential use of advanced technology in scenarios involving a certain degree of threat. In the relevant context, it is worth noting that force, regardless of what form and format it exists in, needs to be controlled. Constructive use of artificial intelligence can make the world a better place, and a destructive approach to the execution of the corresponding process can cause significant problems. It is also worth noting that AI still continues to be a kind of digital substance with uncertain prospects. Artificial intelligence has already demonstrated its considerable abilities, but the potential limits of its development are still unknown for certain. This circumstance also stimulates the desire to regulate AI to a certain extent. The unknown is a natural source of anxiety for the human psyche.
At the same time, there is still no definitive answer to the question of whether the standard methodology for regulating the technology sector can be effective regarding artificial intelligence, which is an advanced digital system containing the potential to become more cognitively developed than the human mind.
Machine intelligence is the focus of FinTech Week, an annual event that has been hosted for nine years by InvestHK and Finoverse. The current conference, which will be held from October 28 to November 1, will highlight Hong Kong’s role as the connector between international business and China, which is the second-largest artificial intelligence market behind the United States. About 700 companies are taking part in this event, including Tencent Holdings, ByteDance, and SenseTime.
The Hong Kong government intends to take advantage of this special administrative region to bring together data from the mainland and international data, and the free flow of information to promote the leverage of artificial intelligence in the financial sector. In this case, the goal is to develop new tools adapted to local conditions. The corresponding statement was made by Paul Chan Mo-po. He also stated his intention to encourage the financial services industry to apply artificial intelligence and seize opportunities, while simultaneously assessing and mitigating the risks that AI will become a tool for fraudsters. It is worth noting that the use of machine intelligence has made the activities of cybercriminals more sophisticated. One of the tools to counteract the corresponding threat in the digital environment is the personal awareness of users. For example, a query in an Internet search engine, such as how to know if my camera is hacked, will allow anyone to get information about signs of unauthorized access to the device.
Last year, the financial volume of fraudulent transactions committed in Hong Kong almost doubled. The corresponding figure was fixed at $1.2 billion. The number of fraud cases increased by 42.6% to 39,824. Against this background, Hong Kong was ranked first in the world in terms of losses from the mentioned crimes per capita.
Paul Chan Mo-po stated the need to focus not only on the benefits of artificial intelligence but also to pay attention to potential challenges, including cyber-attacks and privacy. He also noted that Hong Kong is well placed to tap fintech opportunities related to machine intelligence and blockchain. In this context, Paul Chan Mo-po underlined that in the first six months of 2024, the city accounted for two of the largest fintech transactions in the Asia-Pacific region. At the same time, the mainland accounted for three of the five mentioned largest transactions. Also, during the specified period, the number of fintech companies and Web3 internet firms in Hong Kong increased by 15% year-on-year. The corresponding indicator reached 1,100.
Paul Chan Mo-po stated that to better understand artificial intelligence, the Hong Kong University of Science and Technology (HKUST) will develop its AI model and make its computing and training resources available to the local financial services industry. Last year, this university became the highest-ranked local institution in data science, placing 10th globally in the QS Top Universities Ranking.
The Hong Kong Monetary Authority (HKMA) is currently 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).
Eddie Yue Wai-man, the chief executive officer of the HKMA, said that innovation is not an end in itself, but a means to solve real-world problems. According to him, technology is a means that helps transform everyday experiences and benefits the real economy, whether it is faster payments or improved access to banking services for small and medium-sized businesses.
In a press release from the Hong Kong government, it was noted that the above-mentioned linkage will support 24/7, instant, small-value, cross-boundary remittances using account proxies like mobile numbers. It is expected that the corresponding pilot project will be launched around the middle of next year.
Christopher Hui Ching-yu, the Secretary for Financial Services and the Treasury, said Hong Kong will work hand in hand with financial regulators and industry players to foster a healthy and sustainable market environment. During his speech at FinTech Week, an artificial intelligence avatar was shown off, which he said was born and bred in the mentioned city.
Christopher Hui Ching-yu stated that financial institutions should seize the opportunities of the adoption of machine intelligence. In this context, he also separately noted that this technology can facilitate the promotion of the city and stimulate the development of Hong Kong as an international financial center. According to him, financial regulators will review and update existing regulations and guidelines, and work with local police and international agencies to address the challenges that artificial intelligence poses for cyber policing.
Amid growing concerns about cybersecurity, the Investor and Financial Education Council of Hong Kong will promote public education and public awareness to enhance understanding of the opportunities and risks associated with machine intelligence, especially in the area of financial management.
Luanne Lim, the chief executive officer of HSBC Hong Kong, said that generative artificial intelligence has brought many benefits to the financial industry, but not without risks and limitations. According to her, that is where regulations need to come in. It is worth noting that Luanne Lim is also the rotating chairperson of the powerful Hong Kong Association of Banks.
HSBC, one of Hong Kong’s currency-issuing banks, is considering more than 100 cases of using generative artificial intelligence, such as boosting productivity, customer-facing capabilities, programming, and coding. This was told by Luanne Lim. According to her, the future of artificial intelligence and technology in Hong Kong will require cooperation rather than competition. She stated that at the heart of this is the city’s ambition to become a hub of digital innovation. According to her, the corresponding goal will be achieved only if Hong Kong has a strong ecosystem. It is worth noting that the relevant prospects are realistic and are not what can be called a vision that is not consistent with the actual circumstances, conditions, and capabilities.
