The Financial Services Agency has published the AI discussion paper “Initial Issues Concerning the Actual Use of AI by Financial Institutions and the Promotion of Its Sound Utilization.” Issued by the Financial Services Agency of Japan, this document provides a starting point for discussion of the use of AI in the financial sector. While consideration of its use is progressing in finance, some remain hesitant because of risks and regulation. Taking into account the “risk of not taking on challenges”—falling behind technological innovation and becoming unable to provide high-quality financial services over the medium to long term—the FSA hopes to see progress in initiatives that improve customer convenience and operational efficiency. It provides a detailed overview of the potential AI brings to financial services and the accompanying challenges and risks. It covers AI use cases, the importance of data preparation, security concerns, and the need for AI governance, and presents the current situation and future direction for AI adoption by both financial institutions and supervisory authorities.
The report states the following:
Key Points on the Use of AI in Finance
- Benefits of AI Adoption
- The use of AI by financial institutions is expected to improve operational efficiency and customer service.
- Spread of Generative AI
- Both conventional AI and generative AI are being used, with adoption of generative AI advancing in particular.
- Current Use of AI
- Approximately 90% of financial institutions use AI, with benefits in customer service and risk management.
- Challenge: Data Preparation
- Data preparation is an important challenge for AI adoption.
- Challenge: Explainability and Fairness
- AI explainability and fairness must be ensured.
- Challenge: Personal Information Protection
- There are concerns about personal information protection and the risk of generative AI producing misinformation.
- Need for AI Governance
- Financial institutions urgently need to establish AI governance rules.
- Role of Management
- Active involvement by management is key to the use of AI.
- FSA Initiatives
- The FSA is clarifying AI regulations and strengthening dialogue with businesses.
- Responding to International Regulatory Trends
- Domestic governance must be reviewed in light of international AI regulations.
These are among the points described. As its future policy, the FSA states that it will advance solutions to challenges in AI use and build governance through public-private cooperation, thereby promoting the sound use of AI in finance.
Details are available on the FSA page.
(Appendix 1) AI Discussion Paper (Main Text)
(Appendix 2) AI Discussion Paper (Overview)
Contact information is as follows.
Financial Services Agency Tel: 03-3506-6000 (main number)
FinTech and Innovation Group, Risk Analysis and Coordination Division, Strategy Development and Management Bureau (extension 2277)
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