More Filipinos are using digital financial services, but a large portion of the population remains outside the formal banking system, according to a study by the Philippine Institute for Development Studies (PIDS).
The study found that account ownership in the Philippines rose from 29% in 2019 to 56% in 2021, alongside the growing use of e-wallets, online banking, and digital payments. Digital payments now account for 57.4% of retail transactions. However, despite these gains, more than half of Filipinos remain unbanked.
In a paper titled “Digital Financial Platform Engagement and Financial Inclusion in the Philippines: Insights on AI Deployment and Policy Implications,” authors Nikka C. Pesa, Rutcher M. Lacaza, and Mary Grace R. Agner said digital usage is closely linked to financial inclusion.
“Digital financial engagement is a strong and consistent determinant of financial inclusion,” the authors said, noting that regular use of digital platforms increases participation in the formal financial system.
The findings suggest that the challenge is no longer limited to access, but also involves how frequently and effectively financial services are used.
Despite the rapid shift to digital, the study said structural barriers continue to exclude many Filipinos, particularly those in low-income groups. These include lack of funds, high transaction costs, insufficient documentation, and low trust in financial institutions.
The report also examined the role of artificial intelligence in financial services, noting its growing use in fraud detection, credit scoring, and customer support. While AI has the potential to improve efficiency and expand access, adoption remains uneven across the sector.
Large financial institutions are leading in AI deployment, while smaller cooperatives and savings banks lag behind due to limited resources and capacity.
The study described this as a gap between strong consumer demand for digital services and uneven institutional readiness, warning that it could slow inclusive growth if not addressed.
It also cited concerns over fraud, data privacy, and cybersecurity as factors that may discourage wider adoption of digital financial platforms.
“By strengthening digital infrastructure, promoting financial and digital literacy, and ensuring responsible AI adoption, the Philippines can transform digital financial platforms into a true catalyst for inclusive and sustainable growth,” the authors said.
However, the study emphasized that technology alone is not enough.
“Persistent socioeconomic barriers, institutional disparities, and gaps in digital literacy continue to limit participation, calling for stronger collaboration among policymakers, regulators, and the private sector,” the authors added.
