Laptop Computer Plant

Advance.AI’s solutions address risks in digital banking operations

The release of Bangko Sentral ng Pilipinas’ (Central Bank of the Philippines) Digital Banking Framework accelerated transformations in financial institutions. Digital-only banks or neobanks, while still significantly low in terms of numbers in the Philippines, are growing.

Bernardi Susastyo, chief commercial officer of Advance.AI, a big data and artificial intelligence (AI company), believes that digital banks need to first understand the market they intend to operate in mainly because of varied regulation requirements, among other factors.

“Any digital bank needs to ask itself: Who will be my main customers? Consumers or enterprise? Which markets? What kind of products and financial services will I be providing? How do these meet new consumer needs, behaviors, and trends?,” Susastyo said. “Additional questions to consider include: What is my long-term business strategy and goals? What kind of partners should I be looking for? What kind of structural and competitive challenges or risks do I foresee?”

Bangko Sentral introduces digital banking framework

Accenture: Rapid shift to digital banking accelerating erosion in consumer trust

While there is still a significant number of Filipinos still unbanked, the financial sector hopes that digital banking will be able to address this. The COVID-19 pandemic saw an increase in the use of cashless payments. This could be the sign for digital banks that the market may have matured and have become more accepting of digitalization.

Financial inclusion

According to Susastyo, because digital banks are asset-light with no branches (remote banking) they have the capabilities to automate many bank functions “in ways that are better, faster, and cheaper, for example, e-KYC, manual applications, loan and deposit reviews,” to name a few.

The role digital banking played during the pandemic cannot be stressed enough. The challenges of lockdowns, social distancing, and minimizing any contact to any surfaces outside of the homes are addressed by doing all the transactions online.

Susastyo also sees digital banks will be able to “drive financial inclusion, especially in tier 2 and 3 cities, and offer greater access to financial services for underbanked SMEs.”

Because the business operation is different from traditional banks or financial services companies that want to transition to digital will have to train staff especially in critical areas requiring human decision-making, according to Susastyo.

“There is a greater investment required into cybersecurity, identity theft technology, and fraud prevention,” he said. “Governments may have to get involved in the push as well, for example on national education programs to increase public safety, trust, and adoption of the new digital banking infrastructure.”

There are still products and services that cannot be addressed by digital banking such as “mortgages may still require face-to-face discussions with financial advisers.”

Risk management solutions

Based in Singapore, Advance.AI has been in operations in the Philippines and has partners across Southeast Asia in banking, financial services, fintech, payments, retail, and e-commerce.

It offers solutions on AI-based digital identity verification, risk and credit scoring, and digital lending solutions, which are important components of digitalizing financial service organizations. In the Philippines, it partnered with the country’s credit bureau agency CIBI.

“Our risk management solutions, including identity verification and anti-fraud products, together with CIBI’s credit reporting and information services in the Philippines, help boost financial inclusion and access among unbanked and underserved individuals and businesses,” Susastyo said.

Among its core products are AI solutions (e-KYC, OCR recognition, facial comparison, liveness detection, ID verification, and chatbots), risk management solutions (alternative credit scoring as well as fraud detection and prevention), digital lending solutions (digital onboarding, smart decision engines, and smart collection systems).

“Specifically, in the Philippines, our document identity verification technology can read the country’s SSS, TIN, and UMID, which can be integrated as part of an existing digital onboarding process or deployed on its own,” Susastyo said. “This is better, faster, and cheaper than manual verification and improves operational efficiency and speed, thereby also improving customer experience.”

Susastyo said through Advance.AI’s partnership with CIBI, it will be able to provide accurate credit scoring assessment and evaluation, especially among underbanked and underserved SMEs or consumers.

“Our anti-fraud and fraud prevention technology also reduces financial risk for enterprises,” Susastyo said. “Our partnership with CIBI strengthens our capabilities, technology, and credit profiling of underbanked and underserved Filipino consumers and enterprises.”