Over half of Filipinos remain unbanked despite digital finance surge

More Filipinos are moving into digital finance as account ownership nearly doubled in recent years, but more than half of the population remains outside the formal financial system, according to a study by the Philippine Institute for Development Studies (PIDS). The state-funded think tank found that while account ownership rose from 29 percent in 2019 to 56 percent in 2021, a significant portion of the country still faces structural barriers to banking.

Digital payments now account for 57.4 percent of retail transactions, yet the study underscores a growing disconnect where digital adoption is accelerating but financial inclusion fails to keep pace. PIDS consultants Nikka Pesa and Rutcher Lacaza and PIDS supervising research specialist Mary Grace Agner authored the paper titled, “Digital Financial Platform Engagement and Financial Inclusion in the Philippines: Insights on AI Deployment and Policy Implications.” The researchers found that Filipinos who actively use e-wallets and online banking are significantly more likely to own formal financial accounts.

“Digital financial engagement is a strong and consistent determinant of financial inclusion,” the authors noted, adding that regular use of these platforms increases participation in the formal system. The study suggests the primary challenge has shifted from basic access to the frequency and effectiveness of service use.

Persistent hurdles continue to exclude low-income households, including a lack of money, high transaction costs, limited documentation and low trust in financial institutions. Artificial intelligence is also playing a larger role in shaping the sector. AI now powers fraud detection, credit scoring and chatbot-based customer support across various platforms.

However, adoption remains uneven. While large financial institutions lead the way, smaller cooperatives and savings banks face resource constraints that limit their ability to deploy advanced technology. The researchers described this imbalance as a gap between strong consumer demand and uneven institutional readiness, which could slow inclusive growth.

They also raised concerns regarding data privacy and cybersecurity risks that may discourage users from engaging with digital platforms. To address these gaps, the authors recommended strengthening digital infrastructure and expanding financial literacy. “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 said.

The authors cautioned that technology alone cannot close the 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 said.

The findings precede a PIDS webinar on April 30, 2026, which will examine how AI is reshaping jobs and public sector readiness.