Digital Financial Platform Engagement and Financial Inclusion in the Philippines: Insights on AI Deployment and Policy Implications

This paper examines how digital financial platform engagement influences financial inclusion in the Philippines and explores how financial institutions are deploying artificial intelligence (AI) in enhancing these platforms. It combines nationally representative data from the World Bank Global Findex (2021), institutional indicators from the International Monetary Fund (IMF) Financial Access Survey (2016–2024), and qualitative insights from financial institutions and policy experts. From the demand side, a Digital Financial Engagement Index was constructed based on individuals’ usage of mobile payments, online banking, and digital financial services. Results reveal that digital financial engagement is a strong and consistent determinant of financial inclusion: individuals who actively use digital financial platforms are significantly more likely to own and use formal financial accounts. However, several barriers persist. The lack of money, high perceived costs, documentation issues, and low trust remain key constraints among Filipino adults, particularly among low-income groups. From the supply side, institutional data from the IMF Financial Access Survey (2016–2024) and insights from Key Informant Interviews (KIIs) reveal that financial infrastructure has expanded moderately. While AI adoption remains nascent and largely concentrated among large, digitally advanced financial institutions, AI technologies such as fraud detection, credit scoring, and chatbots are increasingly embedded in the digital platforms where consumers transact. In contrast, smaller cooperatives and savings and loan associations continue to face structural and resource-related barriers to adoption. The convergence of demand- and supply-side evidence highlights that digital financial engagement serves both as a driver and an indicator of financial inclusion, while AI adoption within these platforms has the potential to further enhance access, security, and user experience. Overall, this study provides new empirical evidence that digital financial engagement significantly enhances financial inclusion in the Philippines. The study also documents how financial institutions are strategically deploying AI within these digital platforms, providing insights for responsible AI adoption that can support inclusive financial services. 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. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph.