Hong Kong to Issue Groundbreaking AI Guidelines for Financial Sector

Hong Kong is gearing up to release its first official policy on the use of artificial intelligence (AI) in the financial industry, marking a significant step in the city’s ambition to position itself as a leading financial hub. According to sources close to the matter, the policy statement is expected to be unveiled in late October during the city’s highly anticipated Fintech Week.

The move comes as financial sectors across the globe are increasingly adopting AI technologies, with applications ranging from trading and investment banking to cryptocurrency management. “The government and financial regulators are actively monitoring global developments to ensure the responsible use of AI in Hong Kong’s financial industry,” a spokesperson from the Financial Services and Treasury Bureau (FSTB) said. “A policy statement will be issued later this year, outlining our stance on the application of AI in the market.”

Key Guidelines Expected

The FSTB’s forthcoming statement is anticipated to introduce a framework of ethical guidelines for the deployment of AI in financial services. This will address key issues such as responsible use, transparency, and risk management. Although the final document is still being drafted, officials are reportedly consulting industry leaders for feedback before finalizing the details.

The policy is expected to signal Hong Kong’s broad support for AI, even as the city finds itself in the midst of global tech tensions, particularly between the U.S. and China. Many American AI services, such as OpenAI’s ChatGPT and Google’s Gemini, remain largely unavailable in the region, creating uncertainty for both consumers and financial institutions. In contrast, Chinese tech companies like Baidu and ByteDance also face challenges in delivering their AI solutions in Hong Kong.

Aligning with Global AI Trends

The policy comes at a time when countries like Singapore are advancing their AI regulations, aiming to attract investors who are cautious of Hong Kong’s tightening ties with Beijing. Singapore has emerged as a strong contender in the fintech and AI landscape, offering clear guidelines and support for innovative financial technologies.

Wall Street is also exploring AI’s transformative potential, with major banks recruiting AI talent to optimize operations such as client portfolio analysis and default risk detection. In this context, Hong Kong’s upcoming policy is seen as crucial for the city to remain competitive and foster innovation in its financial services.

A Roadmap for the Future

While the policy statement itself will not immediately impose enforceable rules, it will likely set the stage for more concrete regulations in the future. The FSTB’s approach mirrors its previous statements on emerging technologies like Web3 and family offices, indicating that further detailed regulations will follow after the initial policy framework.

The policy will also consolidate existing guidelines from the city’s banking and securities regulators, clarifying how AI can be safely and effectively deployed in financial services. This move is separate from the government’s broader AI initiatives led by the Innovation and Technology Bureau, which focuses on developing Hong Kong’s proprietary AI tools.

Overcoming Barriers

Despite Hong Kong’s ambitions, regulatory uncertainties have made it difficult for local financial institutions to fully leverage AI technologies. Concerns have arisen over limited access to leading AI services and the unclear legal framework surrounding their use.

However, there are solutions. Companies such as Microsoft still offer their AI tools in Hong Kong, and some users resort to virtual private networks (VPNs) to access restricted services. The city’s Securities and Futures Commission has already updated its guidelines to include public and private cloud services, addressing some of these concerns.

In a further push for innovation, the Hong Kong Monetary Authority and Cyberport, a government-backed tech incubator, launched a regulatory sandbox in August to test new AI applications in banking. The upcoming AI guidelines are expected to provide clarity on when such technologies will be allowed for widespread use.

As Hong Kong prepares to unveil its AI policy, all eyes will be on how the city navigates global tech competition while ensuring a secure and innovative financial environment.