Guidelines For Responsible And Trustworthy Artificial Intelligence In The Financial Technology Industry In Indonesia – Fin Tech

BACKGROUND

Artificial Intelligence (AI), a blend of computer science,
machine learning, and big data, is increasingly being adopted in
various industries, especially in financial technology (Fintech).
This shift towards AI-driven processes aims to enhance business
efficiency and transaction speed. However, it also introduces
unprecedented risks, necessitating a behavioural framework or code
of conduct to optimise AI usage and mitigate risks.

On 24 November 2023 at the Fifth Indonesia Fintech Summit &
Expo 2023, Indonesia’s Financial Services Authority
(Otoritas Jasa Keuangan or OJK), in partnership with
several other organisations,² launched its
code-of-ethics guidelines (Guidelines) to work towards responsible
and trustworthy artificial intelligence within the Fintech
sector.³ This framework aligns with global standards
adopted by the Organisation for Economic Co-operation and
Development (OECD) AI Principle⁴ and the

KEY PRINCIPLES

The fundamental principles for the use of Responsible and
Trustworthy AI in Fintech include:

1. Alignment with Pancasila:⁷ Ensuring AI
   development and usage align with national interests and ethical
   responsibilities based on Pancasila values.⁸




2. Beneficial: AI applications should add value to business
   operations, enhance consumer welfare, improve decision-making
   abilities, reduce inequality, increase financial inclusion, and
   support sustainable economic growth.⁹




3. Fair and Accountable: AI applications must be fair and
   non-discriminatory, protect consumer privacy, and prevent harm.
   There should be a risk mitigation framework to ensure relevant and
   proportional contributions of AI applications.¹⁰




4. Transparent and Explicable: Fintech companies must have control
   over AI processing and be able to explain it to consumers, from
   input to output, including risk and mitigation
   strategies.¹¹




5. Robustness and Security: AI applications should be robust,
   secure against cyber-attacks, and developed by competent or
   certified experts in AI. Continuous testing and validation are
   required for technical processing and security
   aspects.¹²

IMPLICATION

These guidelines require Fintech companies to adopt ethical,
fair, transparent, accountable, robust, and secure AI practices.
This involves regular updates, testing, and validation of AI models
and algorithms, ensuring data integrity and privacy, and
maintaining scalability and human involvement in decision-making
processes.

CONSIDER

Fintech firms should consider the following:

1. Ethical principles and justice in AI usage
   
   Fintech firms must ensure that their AI systems adhere to ethical
   standards and principles of justice. This means designing and
   operating AI in a way that respects human rights, promotes
   fairness, and avoids biases.




2. Continuous learning and improvement of AI algorithms
   
   Fintech companies must implement processes for regular assessment
   and enhancement of their AI algorithms. This refinement helps adapt
   to changing market dynamics, evolving regulatory landscapes, and
   emerging technological advancements.




3. Data privacy and processing are in line with regulations
   
   Fintech firms must manage and process data responsibly, ensuring
   the privacy and security of customer information. This includes
   adhering to relevant laws and guidelines related to data
   collection, storage, usage, and sharing. Companies must also be
   transparent about their data processing activities.




4. User satisfaction and experience
   
   The design and implementation of AI systems should focus on
   enhancing user experience and satisfaction.




5. Disclosure of AI activities and legal accountability
   mechanisms.
   
   Fintech companies should openly disclose how their AI systems
   function, the kind of data they use, and the decision-making
   criteria. Furthermore, there should be precise legal accountability
   mechanisms for decisions made by AI systems, including protocols
   for addressing errors or biases in AI outputs and handling customer
   grievances related to AI decisions.

CONCLUSION

Adopting these guidelines is crucial for responsible and
trustworthy AI implementation in the Fintech industry. It ensures
the ethical use of AI, protecting consumer interests and promoting
sustainable growth while mitigating potential risks associated with
AI technologies. Compliance with these principles will foster trust
and reliability in AI-driven financial services.

Footnotes

1. Setyawati Fitrianggraeni holds the
position of Managing Partner at Anggraeni and Partners in
Indonesia. She also serves as an Assistant Professor at the Faculty
of Law, University of Indonesia, and is currently pursuing a PhD at
the World Maritime University in Malmo, Sweden. This article is
co-authored by Sri Purnama, Junior Legal Research and Jericho
Xafier Ralf, Trainee Associate Analyst at Anggraeni and
Partners.

2. Indonesian Fintech Association
(AFTECH), Indonesian Sharia Fintech Association (AFSI), Indonesian
Joint Funding Fintech Association (AFPI), and Indonesian
Crowdfunding Services Association (ALUDI).

3. The reference in this document
pertains to the version dated 6 December 2023, as obtained from the
Otoritas Jasa Keuangan website, accessible at Panduan Kode Etik Kecerdasan Buatan (Artificial
Intelligence/AI) yang Bertanggung Jawab dan Terpercaya di Industri
Teknologi Finansial (ojk.go.id). Please note that subsequent
amendments or updates to the ethical guidelines may have occurred
after this date. Readers are advised to consult the latest version
of the document for the most current information.

4. A legal instrument that promotes
Innovative and trustworthy AI which also respects human rights and
democratic value. This instrument was adopted back in May of 2019
by the OECD member countries which was then amended on
8^th of November 2023.

5. NIST is one of the United States’
(U.S.) oldest physical science laboratories which was founded in
1901 and is now a part of the U.S. Department of Commerce. NIST was
established by Congress to remove a major challenge to U.S.
industrial competitiveness during 1901. In the present, NIST’s
mission is to promote U.S. innovation and industrial
competitiveness by advancing measurement science, standards, and
technology in ways that enhance economic security and improve
quality of life. NIST, “About NIST”, https://www.nist.gov/about-nist accessed on 8
December 2023.

6. National Institute of Standards and
Technology (NIST) AI Risk Management Framework (AI RMF) is a
framework developed by NIST through consensus-driven, open,
transparent, and collaborative process to better manage risks to
individuals, organisations, and society associated with artificial
intelligence (AI).

7. Pancasila is the Indonesia’s
founding concept compromises of 5 principles: monotheism, civilised
humanity, national unity, deliberative democracy, and social
justice. This concept came about at the onset of Indonesia’s
independence from the Netherlands in 1945 to unify the population
and emphasise moderation and tolerance.

8. Otoritas Jasa
Keuangan,”Kecerdasan Buatan (Artificial Intelligence/AI)
yang Bertanggung Jawab dan Terpercaya“. BUKU – Edt V2 (ojk.go.id), pp. 2,
accessed on 6 December 2023.

9. Ibid.

10. Ibid., pp. 3.

11. Ibid.

12. Ibid., pp. 4.

Originally published December 12, 2023

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.