Hong Kong finance sector on the hook to deploy AI responsibly, says market watchdog's CEO

Hong Kong's asset managers should not fear losing their jobs to artificial intelligence (AI), but the finance sector must take care to deploy the technology responsibly while embracing the opportunities it presents, according to the CEO of the Securities and Futures Commission (SFC).

"We are on the cusp of another revolution that will change the way we live, work and play," Julia Leung Fung-yee said at the Hong Kong Investment Funds Association conference on Monday. "As the AI competition heats up, technologists compare generative AI to the discovery of chips."

Asset managers may adopt generative AI chatbots as tools, and need not fear being replaced because AI will "free up time and capacity for asset managers to better strategise and perform", Leung said.

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"I believe generative AI can be used responsibly to augment, rather than replace, asset managers in strategic decision making."

Julie Leung Fung-yee meets the press at the Securities and Futures Commission office in Hong Kong's Quarry Bay district on December 15, 2022 upon her appointment as the SFC's CEO. Photo: May Tse alt=Julie Leung Fung-yee meets the press at the Securities and Futures Commission office in Hong Kong's Quarry Bay district on December 15, 2022 upon her appointment as the SFC's CEO. Photo: May Tse>

As the city's regulator, the SFC aims to promote the "responsible deployment" of technology, as long as it enhances market efficacy and transparency, cost savings and investor experience, she added.

"At this stage, firms must take [AI] output with a grain of salt, stay alert to AI-related risks and make sure clients are treated fairly," Leung said.

Firms must thoroughly test AI applications before deployment, have qualified staff managing AI tools, have senior management oversight in place and make sure a robust governance framework surrounds AI applications, she said.

"For any conduct breaches, the SFC would look to hold the licensed firm responsible - not the AI," she added.

Since the last of Hong Kong's Covid-19 restrictions were lifted and the mainland border reopened, money-market funds, short-duration bonds, balanced funds and mandates from insurance companies have all seen strong inflows, said Leung, especially for those financial institutions with large retail networks.

Yet, the city still has a long road to recovery ahead and must remain "vigilant and resilient", she said.

Amy Lo, co-head of wealth management for Asia-Pacific and Hong Kong CEO at UBS, speaks at an event in Hong Kong on April 27, 2023. Photo: Jonathan Wong alt=Amy Lo, co-head of wealth management for Asia-Pacific and Hong Kong CEO at UBS, speaks at an event in Hong Kong on April 27, 2023. Photo: Jonathan Wong>

Digitalisation of the industry, which accelerated during the pandemic, has allowed for some banking processes, like opening accounts and due diligence, to happen much more quickly, Amy Lo, chairman of the Private Wealth Management Association's executive committee, said in a separate session at the conference.

The industry should "leverage" the opportunities of this digital transformation and transform its wealth-management practices to be more "hybrid", said Lo, who is also CEO of UBS Hong Kong and the company's co-head of wealth management for Asia-Pacific. However, some parts of the process, like client discussions, will always require a "human touch", she added.

Echoing these sentiments, Stephen Chan, the acting chairperson of the Hong Kong Association of Banks, said that customers want an enhanced "omnichannel experience" when it comes to banking.

Customers freely take advantage of online resources, AI chatbot services and in-person customer service to interact with banks.

"It will be a challenge for [the banking sector] to strike a balance," said Chan, adding that the industry must remember to "not just put everything online", as customer service remains very important.

Meanwhile, blockchain stands to help revolutionise cross-border transactions by enabling faster and more secure assignments, while AI-driven platforms, which can personalise wealth management by offering tailored advice, stand to improve customer service efficiency by reducing response time and human error, he said.

"The integration of technology in the banking industry has proven to be beneficial to all of us," Chan said.

Looking forward, the future of banking will be characterised by increased personalisation empowered by AI and big data, Chan said. By the same token, while technology will enable streamlined processes, new job opportunities will be created in areas such as technology development, AI, data analysis and cybersecurity.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.