BSP sets governance principles for banks’ responsible, ethical AI use

PHILIPPINE financial institutions should develop artificial intelligence (AI) governance frameworks that reflect the extent and complexity of their use of these emerging technologies in their operations to manage potential risks and establish safeguards for ethical use, the Bangko Sentral ng Pilipinas (BSP) said.

- Aaron Michael C. Sy

The BSP, through Memorandum No. M-2026-031 dated June 24, issued a guidance paper titled “Governance Principles for Artificial Intelligence in Financial Services” that its BSP-supervised financial institutions (BSFIs) can use in crafting their own AI policies.

“As artificial intelligence continues to advance and integrate into the financial sector, financial institutions must establish effective controls and safeguards against the attendant risks of AI adoption, such as data privacy concerns, bias leading to unfair and discriminatory practices, and misuse of technology, among others,” BSP Deputy Governor Lyn I. Javier said.

“It is recommended that financial institutions formally develop their own AI Governance Framework, proportionate to the nature, extent, scale, complexity, and materiality of their AI systems, as well as the institution’s overall operational complexity and risk profile, following the principles put forth in the guidance paper.”

Ms. Javier said having these controls in place will ensure that institutions can use AI safely and reap its benefits. “Ultimately, the ethical and responsible use of AI can foster trust, strengthen resilience, and promote sustainable innovation within the financial ecosystem.”

“While the BSP recognizes the significant potential of these technologies, it emphasizes the importance of upholding the highest standards of ethics, transparency, and accountability across the AI system lifecycle, particularly when AI is integrated into the strategic operations of financial institutions,” the BSP added.

The guidance paper outlines the minimum supervisory expectations for AI adoption, but the BSP said these principles are non-binding and compliance is voluntary as the regulator said it is up to BSFIs to formulate their own AI governance policies and risk management frameworks.