Japan: Financial Services Agency published discussion paper on promoting responsible use of Artificial Intelligence in financial sector

On 4 March 2025, Japan's Financial Services Agency (FSA) published an AI discussion paper (Version 1.0) outlining considerations for the responsible use of artificial intelligence in the financial sector. The document presents use cases for both traditional and generative AI, including business process automation, customer interaction, risk management, and market analysis. The categorisation of generative AI applications is as follows: internal business operations, indirect customer service support, and direct customer-facing services, with the latter generally subject to human oversight. The paper identifies challenges such as explainability, bias, cybersecurity, data management, and the potential misuse of AI in financial crime. It is based on a survey of 130 financial institutions conducted by the FSA between October and November 2024, supplemented by interviews with selected firms and references to international policy developments. The document also includes examples of AI governance measures adopted by financial institutions, such as the development of internal policies and staff training programmes.