The Monetary Authority of Singapore (MAS) has developed a risk framework for the use of generative AI (GenAI) in the finance sector as part of the first phase of its Project MindForge initiative.

MAS said its Project MindForge consortium, which includes Standard Chartered, HSBC, Google Cloud, and Microsoft, aimed to develop a framework on the responsible use of GenAI in the financial industry and to “catalyse GenAI-powered innovation to solve common industry wide challenges and enhance risk management”.

The resulting risk framework spans seven risk areas including accountability and governance, monitoring and stability, and transparency and explainability.

"As the financial industry continues to explore the potential of Generative AI technology, it is crucial that we develop a clear and concise framework for its responsible application,” said Sopnendu Mohanty, chief FinTech officer at MAS. “MindForge aims to address common challenges and catalyse AI-powered innovation in the financial industry, while ensuring that this technology is used in a responsible and sustainable manner.”

MAS said the next phase for Project MindForge will see the consortium expand its scope to involve financial institutions from the insurance and asset management industries.

It said the GenAI risk framework could be further improved and extended to the entire financial industry, adding that the consortium plans to conduct further experiments to explore the use of GenAI in areas such as anti-money laundering, sustainability, and cybersecurity.

The Financial Conduct Authority recently became the latest inductee to a policymaker group established by MAS to foster responsible digital asset innovation.

The group, which has also been joined by the central banks of Japan and Switzerland, was established under MAS’s existing Project Guardian, another MAS initiative exploring fund and asset tokenisation use cases, and decentralised finance.

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