September 30, 2024

Hong Kong: GenA.I. Sandbox Launched by HKMA and Cyberport

Author:

Sara S. M. Or

The Hong Kong Monetary Authority (HKMA) has announced the eligibility and application details for participants in its new Generative Artificial Intelligence (GenA.I.) Sandbox initiative.

The GenA.I. Sandbox is pioneering the promotion of “responsible innovation” in artificial intelligence (AI) across the banking industry.

In partnership with the Hong Kong Cyberport technology hub, it is providing a risk-controlled environment for AIs to develop, test and pilot innovative artificial intelligence-based solutions in real-world banking scenarios.

AIs can leverage the computing power offered by Cyberport while obtaining targeted supervisory feedback throughout their trials.

Through interactive engagement with the industry and based on the results of the GenA.I. Sandbox trials, HKMA will share good practices and consider the need for developing further supervisory guidance on the adoption of artificial intelligence.

Invited Participants

The HKMA is inviting Authorized Institutions (AIs) to apply for participation in the trials, encouraging exploration across a diverse range of potential artificial intelligence applications. This includes focus on Retrieval-Augmented Generation, model adaptation, fine-tuning of pre-trained models or training of new models.

With a specific focus on enhancing risk management, anti-fraud measures and customer experience, Sandbox trials are expected to leverage advanced artificial intelligence including GenA.I. models designed for real-time interaction, domain-specific assessment, decision-making support and predictive analytics.

With the ultimate aim of further developing the fintech ecosystem, the HKMA encourages AIs to collaborate with fintech firms when developing use cases for Sandbox trials.

Cyberport has a catalogue of fintech firms, language model providers and GenA.I. solution providers for reference by AIs when forming partnerships or exploring relevant technologies.

Application Period and Procedure

Applications for Sandbox trials are open until 15 November 2024. They should be submitted through the HKMA’s Supervisory Communication Website or the Survey Tool pilot platform.

Applicants are required to provide details including high-level design, applicable models, preliminary risk assessments of proposals and information about their technology partners.

Application results are expected to be announced in December 2024. Selected projects should begin within one month of announcement and be completed within six months. Participants will be required to submit regular progress updates and a final report upon project completion.

Prioritising Applicants

To achieve a fair allocation of resources, applications will be prioritised based on a number of factors meeting the objectives of GenA.I. Sandbox – namely, focused on enhancing risk management, anti-fraud measures and customer experience.

HKMA has shared some non-exhaustive examples of use cases:
- Risk management – Optimise risk management processes for the full range of risk disciplines relevant to AIs, evaluation of creditworthiness by analysing financial statements and other unstructured data of borrowers to enhance the efficiency of loan approval, generate risk assessment reports and timely risk warning.
- Anti-fraud measures – Detect and prevent “Deepfake” scams, review website, emails and message contents to automatically identify fraudulent messages as well as devising timely responses.
- Customer experience – Elevate customer engagement through the use of more advanced customer service chatbots capable of generating personalised responses based on individual customer background, transaction records and past interactions.
The focus is also on solutions that demonstrate a significant level of innovation and potential for substantial impact. Priority will be given to solutions that align with these criteria:
- Adhering to the general principle of data minimisation, AIs are strongly encouraged to adopt data sensitisation techniques such as data masking or tokenisation on their training data, where applicable, to minimise the risk of data leakage, while still ensuring the models are trained and tested under realistic conditions.
- AIs are expected to review and implement adequate data security controls, including encryption and access controls where necessary.
- The level of A.I. or GenA.I.-specific risk mitigations associated with the proposed solutions will be a key factor in the project selection. Projects that focus on exploring and testing a wide range of GenA.I.-driven risk mitigation strategies will be prioritised over simpler or commonly adopted cases, the latter of which may offer less learning or impact.
Key factors for evaluating applications:
- Level of innovation – The extent to which the proposed solution introduces novel or alternative ideas, methodologies or models with the potential to create new digitalisation opportunities.
- Complexity of the solutions – The technical sophistication and intricacy of the proposed solutions to promote advancement and added value.
- Expected contribution to the industry – The potential for the proposed solution to make a meaningful impact on the financial services sector, such as by addressing industry-wide challenges or by formulating new solutions replicable and scalable by different institutions.
- Adherence to the principle of fair use – The degree to which the proposed solution is designed to be used in a fair, responsible, and ethical manner, avoiding harm to others or misuse of computing power.