The government of Hong Kong Special Administrative Region has issued a policy statement on the responsible application of artificial intelligence in the financial market, setting out the government’s dual-track approach to promoting AI development while focusing on the need to mitigate associated risks.

While recognizing the double-edged and dynamic nature of data-driven AI applications in the financial industry, the government on Monday also highlighted in its statement the need to address potential challenges that can arise from AI applications, in areas such as cybersecurity, data privacy and protection of intellectual property rights.

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The statement also said that financial institutions must adopt a risk-based AI governance strategy in the procurement, use and management of AI systems, and that human oversight should be exercised to mitigate the potential risks.

While financial regulators will continuously review and update the existing regulations and guidelines, the government will raise public awareness of the opportunities and risks presented by AI technology in terms of retail investing and financial management.

“We will closely monitor market developments, draw on the Chinese mainland’s and overseas’ experience, and fully leverage the unique advantages of Hong Kong in bringing together the mainland’s and international data as well as the free flow of information, in promoting the use of AI in the financial sector for accelerating the development of new quality productive forces tailored to local conditions,” Financial Secretary Paul Chan Mo-po said in the government statement on Monday.

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“The government will work hand-in-hand with the financial regulators and industry players to foster a healthy and sustainable market development that will promote the high-quality development of Hong Kong as an international financial center,” Secretary for Financial Services and the Treasury Christopher Hui Ching-yu added in the statement.

According to the statement, the Hong Kong University of Science and Technology will make its self-developed AI model available and offer advisory and training services for on-premises deployment of application programming interface and web interface options.

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HKUST said it will soon make available its proprietary InvestLM, Hong Kong's first open-source large language model for financial generative AI applications, to support the local financial industry — in particular, small-to-medium financial firms — in leveraging the model's robust capabilities in generating financial text, to enhance the work efficiency of finance and investment professionals in tasks such as providing investment insights, extracting information, and summarizing financial news and reports.

According to the survey conducted by global financial software company Finastra in 2023, the adoption of generative AI in Hong Kong financial institutions was the highest (38 percent) among the surveyed markets which was above the global average of 26 percent.

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Meanwhile, mainland AI cloud graphics processing unit platform DeepTrin has established its regional headquarters in Hong Kong to lead business expansion and research and development in mainland and overseas markets.

In the next 12 to 18 months, DeepTrin plans to recruit more R&D talent and strengthen cooperation with local research institutions to accelerate AI development and enhance its partner ecosystem.