June 21, 2024

Hong Kong finance sector on pace in AI deployment, with data availability, security and skills gap among concerns: survey

Data availability and cybersecurity represent major challenges to the use of artificial intelligence (AI) in financial services, according to more than 60 per cent of Hong Kong financial professionals in a joint survey by PwC and the Hong Kong Trade Development Council.

Hong Kong’s current pace of AI development in financial services is on par with other financial hubs, according to about 40 per cent of the respondents. But a majority also said a skills gap in the workforce and cybersecurity represent insufficiently addressed challenges, Raymund Chao, PwC Asia-Pacific and China chairman, said at the Asian Financial Forum on Wednesday.

“There is an urgent need for business reinvention – looking at business models, products and services and operations, understanding the impact as well as the opportunity of AI, and harnessing the power of AI to respond to a constantly evolving landscape,” he said.

AI has made inroads into several aspects of financial services, with virtual chatbots, fraud detection and biometric authentication being the most prominent application areas, according to the survey, conducted online in December with 86 senior executives based in Hong Kong.

Li Yunze, Minister of China’s National Financial Regulatory Administration (NFRA), speaks at the 17th Asian Financial Forum 2024 at the Hong Kong Convention and Exhibition Centre in Wan Chai on January 24, 2024. Photo: May Tse

AI will find use in areas such as algorithmic trading, automated customer service and more effective fraud detection, as well as more efficient claims processing, a majority of respondents said.

The city’s financial professionals expressed optimism about Hong Kong’s standing as a global financial hub well-positioned for AI adoption. More than 60 per cent indicated confidence in investor awareness, acceptance and access to capital for AI investment.

However, concerns persist. More than two-thirds of respondents cited Hong Kong’s data availability and quality as factors hindering AI implementation, and 65 per cent identified cybersecurity and data privacy as key challenges.

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One in four professionals also said Hong Kong is not adequately prepared for future AI adoption in terms of workforce availability and readiness, according to the survey.

To harness the full potential of the city as both an international financial hub and a cutting-edge innovation and technology centre, respondents suggested a set of strategic measures. These included promoting further use of AI in the fintech industry, encouraging data sharing and the development of open APIs (application programming interfaces, which allow computer systems to work together), strengthening Hong Kong’s AI regulatory framework, setting up policies to attract AI-related talent and collaborating with other Greater Bay Area cities to develop innovative solutions.

Current regulations are neutral in terms of their impact on AI usage, according to half of the respondents, but one-third said current regulations are too restrictive.

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A robust data governance framework, regulatory sandboxes for testing and deploying AI technologies, and a designated regulatory framework for responsible AI use are among the regulatory changes the financial professionals expect to see, Chao said.

“We are encouraged by the continuing efforts of the Hong Kong SAR government, in driving the safe sharing of data and addressing some of the business community’s concerns, specifically the big concern around the flow of data,” he said.

“We’re encouraged to see, and most notably, the recent memorandum of cooperation between the Cyberspace Administration of China and the Hong Kong SAR government that focused on fostering cross-border data flow in the Greater Bay Area.”

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