THE Bangko Sentral ng Pilipinas (BSP) has released governance principles to help banks and financial institutions safely expand the use of artificial intelligence (AI) in customer service, fraud detection and other operations.
Memorandum M-2026-031, “Governance Principles for Artificial Intelligence in Financial Services,” is a voluntary guidance document aimed at assisting institutions supervised by the BSP to develop AI management policies and risk management frameworks that are responsive to the “nature, extent, scale, complexity, and significance of their AI systems.”
The guidance establishes five core principles under the “STARS” framework: sustainability, transparency, accountability, responsibility (social equity), and security.
Under Sustainability, institutions are encouraged to develop AI systems that create long-term value and invest in human capital development and human-centered AI, while minimizing environmental impact through energy-efficient computing and reducing e-waste.
Transparency requires a central inventory of AI systems, clear disclosure when AI impacts financial decisions, and thorough documentation of model design, data sources, and error resolution.
Accountability requires human oversight throughout the AI lifecycle, clearly defined responsibilities between management, developers, and oversight functions, and appropriate staff expertise in AI, data science, and finance.
Security requires robust cybersecurity measures, regular risk assessments, and continuous monitoring to detect bias, hallucinations, and other anomalies.
BSP Vice-President Lin Javier warned that the absence of a comprehensive AI governance framework exposes financial institutions to operational, technical, model, market conduct, reputational, strategic and legal risks, and that uncontrolled AI systems “can perpetuate bias and lead to unfair practices and the exclusion of individuals from accessing financial products and services.”
BSP acknowledged that institutions are at different stages of AI adoption and that customized governance practices are important. It clarified that the guidance does not restrict innovation or endorse any particular technology, but rather aims to “encourage the ethical and responsible use of AI in industry.”
The central bank said it would continue to monitor AI developments and issue regulations “whenever necessary to foster innovation and maintain the stability and competitiveness of the financial system.”
