More Filipinos are moving into digital finance, with account ownership nearly doubling from 29% in 2019 to 56% in 2021, and digital payments now accounting for 57.4% of retail transactions. Yet despite this rapid shift, more than half of the population remains outside the formal financial system, according to a new study by the Philippine Institute for Development Studies (PIDS).
The study underscores a growing disconnect: digital adoption is accelerating, but financial inclusion is not keeping pace.
Titled, “Digital Financial Platform Engagement and Financial Inclusion in the Philippines: Insights on AI Deployment and Policy Implications” by PIDS consultants Nikka C. Pesa and Rutcher M. Lacaza, and PIDS supervising research specialist Mary Grace R. Agner, the paper finds that Filipinos who actively use digital platforms such as e-wallets, online banking, and digital payments are more likely to own and use formal financial accounts.
“Digital financial engagement is a strong and consistent determinant of financial inclusion,” the authors noted, emphasizing that regular use of these platforms increases participation in the formal financial system.
This suggests that the issue is no longer just access to financial services, but how frequently and effectively these services are used.
However, the expansion of digital finance has not translated into universal inclusion.
The study points to persistent barriers that continue to exclude many Filipinos, particularly those from low-income households. These include a lack of money, high transaction costs, limited documentation, and low trust in financial institutions.
Even as digital payments become more common, these constraints prevent a large segment of the population from fully participating in formal financial systems.
The findings also highlight the emerging use of artificial intelligence (AI) in shaping financial services.
AI is increasingly embedded in digital platforms, powering functions such as fraud detection, credit scoring, and chatbot-based customer support.
While these technologies have the potential to improve efficiency and expand access, their adoption remains uneven across the sector.
Large financial institutions are leading the adoption of AI, while smaller cooperatives and savings banks face structural and resource constraints that limit their ability to adopt such technologies.
This uneven rollout points to a broader structural issue: while consumers are rapidly embracing digital tools, institutional capacity to deploy advanced technologies remains limited.
The study describes this imbalance as a gap between strong consumer demand and uneven institutional readiness—one that could slow the pace of inclusive growth if left unaddressed.
Beyond access and technology, the study also raises concerns about trust and security. As digital transactions increase, so do the risks of fraud, data privacy, and cybersecurity—factors that can discourage users from engaging more fully with financial platforms.
To address these challenges, the authors recommend strengthening digital infrastructure, expanding financial and digital literacy, and ensuring clear and responsible governance of AI systems.
“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 study stated.
At the same time, the authors caution that technology alone cannot close the inclusion gap.
“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 also stressed.
The findings come ahead of the PIDS webinar, “AI and the Future of Work: Implications for Skills, Jobs, and Public Sector Readiness,” scheduled on April 30, 2026. The event will explore how AI is reshaping jobs, skills, and institutions, complementing the study’s insights on how AI is transforming financial services.
As digital tools become increasingly central to everyday transactions, PIDS emphasized the need to ensure their benefits are shared more broadly across all sectors of society.
Read the full study at https://doi.org/10.62986/dp2026.03.
Photo by Nathana Rebouças on Unsplash
