The collaboration between the Monetary Authority of Singapore (MAS), banks, and technology firms aims to develop a generative AI risk framework and explore its applications in the financial services sector. MAS initiated Project MindForge earlier this year to investigate the impact of generative AI on the financial services (FS) sector.
The first phase of the project involves the creation of a white paper outlining a comprehensive risk framework. This framework addresses various concerns, including the potential for more sophisticated cybercrime tactics, copyright infringement, data risk, and biases. Key players such as DBS, OCBC, United Overseas Bank, Standard Chartered, Citi Singapore, HSBC, Google Cloud, Microsoft, and Accenture are actively supporting the project, collaborating on the development of the framework to ensure responsible use of Generative AI (GenAI).
Seven risk dimensions were identified, covering areas such as accountability and governance, monitoring and stability, transparency and explainability, fairness and bias, legal and regulatory aspects, ethics and impact, as well as cyber and data security.
The consortium has also established a platform-agnostic GenAI reference architecture. This architecture provides a comprehensive list of building blocks and components that organizations can leverage to create robust, enterprise-level technology capabilities.
Moving forward, the consortium is progressing to explore practical use cases, including applications in complex compliance tasks and the identification of hidden, interconnected financial risks. The involvement of insurance and asset management firms is also planned for subsequent phases of the project.
Sopnendu Mohanty, Chief Fintech Officer at MAS, emphasizes the importance of developing a clear and concise framework for the responsible application of Generative AI technology in the financial industry. He states that Project MindForge aims to address common challenges, catalyze AI-powered innovation, and ensure the responsible and sustainable use of this technology.
In parallel, recent research from the Gilmore Centre for Financial Technology reveals that 93% of senior decision-makers at financial institutions believe the UK Government should introduce stricter regulations for Generative AI. A significant portion (77%) expresses dissatisfaction with the Prime Minister’s approach to Gen AI, with 85% acknowledging concerns about the security risks posed by Generative AI.
The development of the AI Framework is just one facet of MAS's broader initiatives unveiled at Singapore's annual fintech festival. MAS has outlined plans for the live issuance of a wholesale Central Bank Digital Currency (CBDC) for interbank settlement in the coming year. The first pilot will involve using “live” wholesale CBDC to settle retail payments between commercial banks, with potential future pilots including the settlement of cross-border securities trade.
Under the Project Orchid umbrella, MAS is overseeing four new pilot trials for digital money with various banks and technology partners. Additionally, MAS has launched a local Environmental, Social, and Governance (ESG) hub to simplify how the financial sector and real economy collect, access, and act upon sustainability data. This initiative is supported by a cross-border platform under the new entity Greenprint Technologies, with strategic partners including HSBC, KPMG in Singapore, MAS, Microsoft, and MUFG Bank.
