Singapore’s Deputy Prime Minister and Coordinating Minister for Economic Policies Heng Swee Keat stated that in the past 12 months, the world has undergone rapid changes and uncertainties. Although the pandemic might be receding, new challenges such as global high inflation, slowing growth, and supply chain disruptions have emerged.
Heng Swee emphasised the importance of finance as the backbone of innovation, growth, and development, particularly in addressing global challenges. They highlight the significant funding gap in achieving net-zero emissions by 2050 and emphasise the role of finance and FinTech in enabling this transition. He also acknowledged the positive impact of FinTech in improving access and inclusion, especially for emerging economies and individuals in need.
At the same time, the Deputy Prime Minister stressed the need to actively manage the risks and downsides associated with rapid innovation. He emphasised the importance of balancing innovation and stability, noting that financial stability is the foundation of financial activities.
He discussed the need for effective supervision, regulation, and risk management in areas such as digital banking services, decentralised finance (DeFi), and emerging technologies like Generative AI (GenAI).
“As a general-purpose technology, GenAI will have pervasive application and is expected to be particularly game-changing for the services industry,” Heng Swee said.
He also identified three critical issues that need to be addressed beyond the initial stage of development: fostering the safe and responsible use of AI, committing to sustainability and the green transition, and building and renewing trust for cross-border digital finance.
Heng Swee believed that the deployment of GenAI in the financial sector requires a comprehensive approach to ensure its safe and responsible use. This involves various considerations and measures to mitigate risks and maximise benefits.
He emphasised the collaborative and open-source approach taken in understanding emerging technologies, starting with the development of the Fairness, Ethics, Accountability, Transparency (FEAT) principles in 2018.
The Veritas Consortium, involving 31 industry players, has further operationalised these principles and will release a Veritas Toolkit 2.0 to support financial institutions in integrating them into their risk governance. The goal is to empower financial institutions worldwide to prepare for GenAI and lead in responsible AI adoption.
In addition, Project MindForge, where data resources and domain expertise from the banking sector are combined with advanced technologies and algorithms from top AI companies. Use case studies, prototyping, and pilots will aid in learning and translation, complementing the AI in Finance Global Challenge recently launched under the Global FinTech Hackcelerator.
With the support of a Cloud company, this platform will consolidate comprehensive resources, including datasets and use cases, to accelerate AI development. It aims to enable individuals to showcase their skills, smaller enterprises to level up their capabilities, and FinTechs and financial institutions to demonstrate market-ready solutions for business opportunities and funding.
Establishing ethical frameworks and principles specific to GenAI is crucial. These frameworks should address issues such as fairness, transparency, accountability, and privacy. Collaborative efforts between industry stakeholders, regulatory bodies, and experts can help define these principles and ensure their implementation.
Regulators play a vital role in overseeing the deployment of GenAI in the financial sector. They should develop guidelines and regulations that govern the use of AI technologies, including GenAI. These regulations should cover areas such as data protection, algorithmic transparency, and consumer protection to ensure compliance and prevent potential harm.
Collaboration among industry participants, academia, and regulators is vital to share best practices, research findings, and lessons learned. Establishing platforms for collaboration and knowledge sharing can help in collectively addressing challenges, identifying emerging risks, and fostering responsible innovation.