Report urges policy reforms to boost AI in APAC financial services

Flint Global has published a report proposing policy approaches for accelerating the expansion of Artificial Intelligence (AI) within the financial services sector across Asia-Pacific.

The report, commissioned by Amazon Web Services (AWS), explores how AI is already having a notable impact on the financial services industry across APAC. According to Flint Global, AI-enabled personalisation is currently improving customer experiences, and the technology has become indispensable in tackling fraud, financial crime, and cyber threats.

AI's impact in financial services

The report draws special attention to agentic AI systems, which have the capacity to deliver further improvements in the sector. An example cited in the research involves adaptive asset management platforms that can automatically adjust investment strategies in real time as markets fluctuate.

Flint Global notes that these developments signify a shift in how financial services can deliver value to customers, ensuring more responsive and secure offerings with the help of AI-powered systems.

Barriers to AI adoption

The report identifies several barriers that financial institutions face as they strive to adopt AI at scale. While there is enthusiasm from industry players to embrace these technologies, Flint Global highlights that significant challenges persist. These include a shortage of AI skills, institutions' varying risk appetites and approaches, inconsistencies in cloud technology adoption, and issues relating to cross-border data flows.

Another major challenge outlined is the uneven access to quality data throughout the region, coupled with regulatory uncertainty. In particular, institutions encounter ambiguity around regulatory expectations when deploying AI in more complex applications and for customer-facing services that may have broader impacts.

Recommendations for policymakers

To accelerate adoption, Flint Global's report outlines twelve recommendations targeted at policymakers in the region. These are divided into two main areas: promoting innovation and inclusive adoption, and developing an enabling regulatory environment.

Among the recommendations to promote innovation and broader adoption are the following proposals:

• Measure AI adoption as the basis for more targeted policymaking
• Offer best non-binding guidance on AI adoption and risk management
• Lead by example in AI adoption
• Democratise access to underlying core technology and data infrastructure
• Enable access to and provision of quality data
• Promote broad AI literacy across the financial services industry

On the regulatory front, the report recommends:

• Adopting a proportionate, principles-based, and risk-based approach to AI rules
• Assessing existing regulations before introducing new, sector-specific AI laws
• Building regulatory certainty and signalling that AI innovation is encouraged
• Leveraging regulatory sandboxes to drive AI adoption and innovation
• Establishing a shared responsibility framework for governing the use of AI in financial services
• Promoting regional and international regulatory harmonisation and coordination

Industry perspectives in the report

The transformative potential of AI for the financial services sector across APAC - How AI is already improving the customer experience in the sector and has become an essential tool for countering fraud, financial crime, and cyber threats. It also highlights the particular potential for agentic AI systems to deliver further improvement in financial services, for example by enabling adaptive asset management systems that adjust strategies in real time based on market changes.

Despite a strong enthusiasm for AI uptake, financial institutions face obstacles that hinder or delay adoption, including limitations in AI skills, risk posture and appetite, inconsistent levels of cloud adoption, barriers to cross-border data flows, uneven access to quality data, and a lack of certainty of regulatory expectations - particularly in adopting AI for more complex and external customer-facing applications.

The report's recommendations for policymakers in APAC include: Promoting innovation and inclusive adoption: Measure AI adoption as the basis for more targeted policymaking, Offer best non-binding guidance on AI adoption and risk management, Lead by example in AI adoption, Democratise access to underlying core technology and data infrastructure, Enable access to and provision of quality data, Promote broad AI literacy across the financial services industry. Developing an enabling regulatory environment: Adopt a proportionate, principles- and risk-based approach to AI rules, Assess existing regulations first before introducing new, sector-specific AI-specific laws, Build regulatory certainty and signal that AI innovation is encouraged, Leverage regulatory sandboxes to drive AI adoption and innovation, Establish a shared responsibility framework for governing AI use in financial services, Promote regional and international regulatory harmonisation and coordination.

Flint Global's report concludes that driving the adoption of AI technologies within financial services will require policy, regulatory and industry action across these critical areas.