Artificial Intelligence Ethics Best Practices Model for Financial Decision-Making in Chinese Financial Institutions

Keywords Artificial Intelligence, Chinese Financial Institutions, Ethics Best Practices, Financial Decision-Making

Introduction

In recent years, artificial intelligence (AI) technologies have demonstrated exceptional capabilities in intelligent tasks, such as problem-solving, pattern recognition, and decision-making (Marda, 2018; Mogaji & Nguyen, 2022). Since recognizing this potential, financial service providers have increasingly incorporated AI into their operations to enhance the accuracy of financial decisions (Truby et al., 2020). The use of AI algorithms, capable of vast dataset analysis and intricate pattern recognition, not only streamlines operational processes but also delivers personalized financial services to ensure customer satisfaction (Northey et al., 2022). Moreover, AI's rapid fraud detection capabilities play a crucial role in protecting institutions and clients from financial losses and security breaches (Ghazwani et al., 2022).

China, a global financial powerhouse, demonstrates a particularly pronounced commitment to AI adoption. According to China Daily, Chinese financial institutions (CFIs) have invested over 56 billion yuan (approximately USD 7.6 billion) in AI-related hardware and software. The rapid implementation of AI technology by CFIs has given rise to new theoretical and managerial challenges (Bussmann et al., 2020). Ethical concerns, particularly regarding data collection, algorithmic biases, and discrimination, have surfaced as CFIs collect data to train and operate their AI systems (Jiang et al., 2020; Xie, 2019; Zhao, 2021). Roberts et al. (2021) have emphasized the need to identify and address ethical issues for responsible and effective AI utilization in financial institutions. However, there remains a critical theoretical gap, particularly in the identification and resolution of the ethical issues surrounding the use of AI in financial decision-making processes.

The unique cultural and regulatory environment of China's financial industry introduces distinct challenges and considerations that significantly influence the implementation of AI ethics best practices. In the context of deeply ingrained cultural conventions, CFIs are characterized by collective values, social harmony, and Confucian principles (Wen et al., 2021). These cultural factors may shape the perception of ethical considerations in AI adoption and influence the interpretation and prioritization of fairness and transparency. Additionally, the active role of the government in shaping the regulatory framework adds another layer of complexity (Lee, 2020). The regulatory environment plays a crucial role in defining the boundaries within which financial institutions operate, affecting the implementation of AI ethics best practices. For instance, compliance with government directives and regulations may influence the extent to which financial institutions can adopt certain AI technologies or the degree of transparency required in algorithmic decision-making. Thus, Chan et al. (2022) opined that ethical practices regarding AI need to be adaptable to these specific cultural and regulatory considerations to ensure their effectiveness and relevance in guiding responsible AI use in the Chinese financial context.