The FSC Issues Guideline on the Use of AI in Financial Services

The Financial Services Commission (FSC) in South Korea announced that it has issued a guideline on the use of artificial intelligence in financial services after holding a consultative body meeting on digital finance via teleconference chaired by Vice Chairman Doh Kyu-sang. The guideline aims to strengthen public trust in AI-based financial services and continue to improve innovation in financial industry.  

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"All financial and finance-related institutions offering financial transactions and other customer oriented services using AI technologies should follow the guideline which sets forth the least necessary level of standards for AI," noted the FSC in its official press release.  

According to the FSC, financial firms should establish three internal control mechanisms such as adopting ethical principles for AI, a governance framework to oversee AI-related services end-to-end, and a system for monitoring and managing the risk of privacy breaches.

The guidelines emphasise that firms should manage the source and quality of data used in machine learning, establish a privacy protection system to prevent abuse or misuse of personal financial data, and improve risk management to ensure fairness and avoid unreasonable consumer discrimination.

Adequate explanations on AI-based financial services should be provided to financial consumers to help them better understand and practice their rights.

The guidelines also highlight the need for appropriate safety and security measures to be in place for AI-based financial services developed and operated by third-party contractors.

The guideline is available in South Korea.