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The Hong Kong Monetary Authority (HKMA), Hong Kong’s central bank, has released detailed guidelines aimed at safeguarding consumers as banks increasingly adopt Generative Artificial Intelligence (GenAI) technologies. 

The guidelines — published on Aug. 19 — focus on key areas such as governance and accountability, fairness, transparency and disclosure, and data privacy and protection. The central bank urged banks to implement robust oversight and human involvement in GenAI-driven decisions, particularly in customer-facing applications.

Explaining the reason behind the guidelines, HKMA’s Executive Director Alan Au, stated: 

“Since GenAI uses complex models, potential risks such as lack of explainability and hallucination (i.e. generating outputs that seem realistic but are factually incorrect, incomplete, lack important information, or lack relevance to the context) could cause even more significant impact on customers.”

In terms of accountability, Hong Kong’s central bank has announced that “the board and senior management of authorized institutions should remain accountable for all the [big data analytics and artificial intelligence] BDAI-driven decisions and processes.”

The HKMA's move follows a survey revealing that 39% of banks are either using or planning to use GenAI. The guidelines require banks to ensure that GenAI-generated decisions are ethical, fair, and unbiased, with clear disclosure to customers about the use and limitations of these technologies. Banks are also required to allow customers to opt out of GenAI and seek human intervention in decisions impacting them.

Furthermore, the HKMA stresses the importance of protecting customer data, mandating compliance with the Personal Data (Privacy) Ordinance. 

The guidelines also encourage banks to use GenAI proactively, such as in identifying vulnerable customers and issuing fraud alerts, while ensuring that the technology does not compromise consumer rights or data security.

These guidelines are an extension of the 2019 principles on Big Data Analytics and AI, updated to address the specific challenges and risks posed by GenAI. The HKMA's latest circular serves as a framework for banks to innovate responsibly while maintaining high standards of consumer protection.

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