MOST Philippine banks believe using artificial intelligence (AI) in their systems will prevent money laundering activities, a survey by global analytics firm FICO showed.

FICO’s Integrated Anti-Money Laundering Compliance Survey said 73% of the banks agree AI will boost early and accurate detection of laundering activities, it said in a statement on Wednesday.

The survey was conducted in May among 256 bank senior executives in Asia Pacific, including those in Australia, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore, South Korea and Taiwan.

Almost all or 95% of Philippine respondents said integrating AI in traditional rules-based methods can help banks comply with anti-money laundering (AML) policies.

“Rules-based compliance systems continue to be the workhorse for banks in Asia Pacific when fighting financial crime. However, some early adopters are starting to embrace the new world of AI and realize that the decade-old rules-based systems can’t keep up with sophisticated threats on their own,” Timothy Choon, FICO Financial Crimes Leader in Asia Pacific, said in a statement.

While all of the Philippine banks surveyed are eager to acquire AI technology, with 41% of them planning to spend on this next year, 36% said operating AI would be difficult.

Local banks said challenges in shifting to AI-enabled systems include the ability to meet new types of compliance risks in channels and products, the capacity to provide an end-to-end integrated compliance solution and being able to adapt quickly to changes in regulation.

“We can see that addressing the competing needs of regulatory compliance and customer experience remains a balancing act for most institutions. Banks are challenged by the need for more information to deal with high rates of alerts from ineffective systems, while not vexing customers with incessant due diligence questions,” Mr. Choon said.

Despite these challenges, Mr. Choon said Philippine banks are still likely to invest in AI in 2021 as the survey’s respondents showed they were supportive of the technology despite higher risks of financial losses from the coronavirus 2019 pandemic.

“This survey, conducted in May, shows that even in the recent economic downturn triggered by the pandemic, banks remain committed to targeted spending that boosts their AML compliance. There is an increased willingness to perceive compliance and fraud as a common financial crime risk,” Mr. Choon said. — Kathryn Kristina T. Jose

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