The Philippines has a complicated consumer payment environment. Despite the heavy usage of credit cards, both the banked and the underbanked increasingly rely on digital financial services, especially e-wallets, which are now widely accepted. E-wallets not only facilitate transactions but also play a critical role in the distribution of remittances by providing the ‘last kilometer’ of high-volume cross-border electronic money transfers, further eroding reliance on cash. However, this increased adoption of e-wallets has also magnified the impact of fraud due to faster payment processing. Additionally, the risks of credit card fraud continue to rise, adding pressure to implement robust fraud detection systems.

BSP is leading the region by requiring financial institutions to use real-time fraud monitoring and integrate fraud and AML systems, though achieving compliance remains challenging. The complexity of fraud threats, digital money flows, and regulatory demands results in a heightened risk of fraud.

In this landscape, the adoption of AI presents both opportunities and challenges. AI technologies can significantly enhance fraud detection by identifying suspicious patterns in real-time and adapting to emerging fraud tactics. However, practitioners must optimize the underlying performance infrastructure to handle high data analytical demands efficiently, ensuring that AI’s full potential is realized in enhancing fraud detection and reducing reliance on manual investigation.