A joint report by the Hong Kong Trade Development Council (HKTDC) and PwC has hailed Hong Kong’s welcoming stance on artificial intelligence (AI), ranking it on par with the efforts of other leading financial centers.
The report focuses on the application of AI systems in finance, exploring myriad use cases, risks, and the impact of regulation. The report results from a survey involving 86 finance executives in Hong Kong, the academia, regulators, and consumers to explore the future of financial services in the region.
In its submission, the joint report says Hong Kong can rub shoulders with New York, London, and Dubai regarding AI adoption in finance, an opinion shared by over 41% of respondents.
“The AI era is here, and it is being integrated into businesses around the world at remarkable speed,” said Raymund Chao, PwC Asia Pacific and China Chairman. “Encouragingly, our survey found that Hong Kong is perceived to be at par with other finance hubs in the race for AI.
Several financial institutions in Hong Kong have integrated AI models into their processes, with 80% rolling out chatbots for automated customer services. Others are fine-tuning models for fraud detection and biometric authentication to limit the activities of money launderers and cyber criminals.
The survey identified rising AI trends in Hong Kong’s financial institutions in the areas of algorithmic training, claims processing, and risk assessments.
Despite the upbeat nature of the report, respondents identified areas of concern for AI adoption in the region. Top of the list is the data availability and quality challenge, with nearly 70% of respondents warning that the issue may snowball into a major crisis for the ecosystem.
Other areas of concern include cybersecurity and data privacy risks exacerbated by the activity of cybercriminals. There are fears that the financial data of clients may fall into the wrong hands in the absence of proper guardrails.
The state of AI regulation in Hong Kong came under fire, with 35% of respondents saying that current rules are too restrictive for AI developers. Fifty percent of surveyed executives appear indifferent toward the state of AI regulations in Hong Kong, while 16% view the regulatory framework as forward-thinking, akin to its Web3 rule book.
Recommendations to stay ahead of the curve
The report advocates for a healthy balance between risk and innovation to keep pace with other financial hubs and ensure consumers. Hong Kong’s regulators are encouraged to roll out regulatory sandboxes, a proper data governance framework, and a playbook for safe AI development and adoption.
Some of the respondents are throwing their weight behind data sharing and open APIs, regional collaboration, and policies to deepen the AI talent pool for government and private-sector entities.
“We believe that a collaborative, responsible, human-led, and tech-enabled approach to AI will bring tremendous opportunities for a shared tomorrow,” said Chao.
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