BSP Issues AI Guidelines for Financial Institutions

The Bangko Sentral ng Pilipinas (BSP) has issued voluntary guidelines on how banks and e-wallet operators should use artificial intelligence in their operations. The guidelines, released through Memorandum No. M-2026-031, outline the BSP's 'minimum supervisory expectations' for the responsible use of AI.

While AI is already a common practice in the financial sector, with 21 out of 48 responding financial institutions (44%) having deployed at least one AI system in 2024, the BSP is keen to ensure its use is transparent and accountable. The guidelines are non-binding, meaning financial institutions are encouraged but not required to adopt them.

The BSP has introduced five governance principles, summarized by the acronym STARS: sustainability, transparency, accountability, responsibility, and security. According to BSP Deputy Governor Lyn Javier, the principles 'provide BSFIs with principles that can help them innovate while mitigating unintended consequences from the use of the technology.'

The BSP emphasizes that customers should be notified when AI output is being used in a product or process, and institutions should disclose relevant limitations. Users should also be able to question how an output was produced and why a recommendation was made, instead of blindly relying on the technology.

Banks and e-wallets must maintain human oversight while using AI. The BSP acknowledges that AI systems may perpetuate biases, leading to unfair practices and the exclusion of individuals from access to financial products and services. To prevent this, institutions must ensure their training data is well-prepared, well-represented, and free from unauthorized interference.

Institutions may use AI to analyze payment and spending patterns, estimate loan repayment likelihood, verify customer identities, recommend financial products, detect scams, and respond to concerns through chatbots. However, AI may not replace human responsibility; institutions must establish safeguards, assign clear ownership of AI systems, and monitor their results for errors and unfair outcomes.

The BSP's guidelines come at a time when the use of AI in the financial sector is increasing. According to a 2024 BSP survey, 60% of responding financial institutions included AI or machine learning in their technology roadmaps.

The Philippine AI landscape has significant implications for the global AI community. The Philippines is home to many AI research institutions and companies, and the country's AI strategy is expected to shape the future of AI development in Southeast Asia.

The BSP's guidelines on AI use in the financial sector aim to promote responsible AI practices and ensure that the benefits of AI are accessible to all. By providing clear guidelines and emphasizing transparency and accountability, the BSP is taking steps to mitigate the risks associated with AI use in the financial sector.