AI reinventing Phl banking landscape

Generative AI (gen AI) has recently come to the forefront in reinventing banks’ business models today. Along with real-time payments, open finance framework and digital currencies, gen AI is now among the powerful initiatives that have been shaping the Philippine banking landscape.

Karen Kim, CEO of Human Managed, said there are opportunities in using gen AI in automating banks’ biggest services such as deposits, payments and clearance services.

“Because the banks already have so much volume and historical data on these transactions, gen AI is a perfect way for the data to be trained in different models and then actually automating those recommendations,” Kim said.

Banks could also digitize its customer engagement and personalize different reports by using gen AI to improve their services. By doing so, banks will have a higher customer retention.

Kim told The STAR that gen AI could support lenders in three aspects.

“It can support the banks in scaling multiple opportunities that they have and at a much faster rate than what was available. It could also help them to reduce the threats as well as improving the everyday operations through data. Lastly it could facilitate the management between scaling and protecting,” she said.

nd Human Managed is a cloud-native data platform who services banks in the ASEAN region with the Philippines as its biggest market.

However, threat actors will always go to where the opportunities are, she said. Where there is digital transformation, there will be threats to cybersecurity.

“One of the reasons why phishing is such a high attack vector in the Philippines is that the average consumer is not aware of the different ways that social engineering could happen,” Kim said.

“Gen AI can be trained on different learning materials, different human types of documentation to give these kinds of recommendations when the customers interact with the banks. These have two different benefits; one you can actually improve your service experience and you can help the economy by bringing up their literacy and security itself,” she said.

Human Managed has been working with Philippine banks on how to use gen AI for fraud detection and prevention, as any threats to cybersecurity would directly impact the banks’ bottom line and their reputation.

She said gen AI fraud models could analyze behavioral data and process enormous amounts of customer transaction history to identify unusual events.

But while Philippine banks have a big vision on where they want to go in improving its technological capabilities, Human Managed said they still have to be anchored in the current regulatory environment as well.

Kim said that industry players need to understand the relationship between the data points and the current regulatory requirements.

“So, we put different frameworks together. One is from the Bangko Sentral ng Pilipinas, or whatever the industry standard is, and we maintain that as a database,” she said.

“We also maintain the current state or the data that the bank generates in a separate database to generate the context. So, when the bank feels comfortable that that model is ready to go, then we can actually move on to more advanced and behavior-related use cases like fraud,” she added.

BSP Governor Eli Remolona earlier said the central bank is studying the impact of gen AI in the banking industry and seeks to implement some guardrails to mitigate potential risks. This developed, as banks have inevitably begun exploring programs such as ChatGPT and other forms of machine learning.

Kim said their client makeup ranges from the biggest banks in the region to other players in the financial ecosystem, like clearing houses, payment networks, or even small boutique financial firms.

“We serve companies big and small. And the common thing that we look for is they have data. If they have data that they want to understand better, or they want to have better operations from data, then we’ll say yes,” she said.

She also said that Philippine banks are well positioned to adopt new and emerging financial technologies, as they have been generating data on transaction and user behavior patterns in the financial industry.