Digital finance drives economy, financial inclusion in 2023

Digital financial services continue to drive the digital economy, investments, and financial inclusion in the Philippines, a recent report has found.

In fact, electronic banking transactions in the country amounted to three times its GDP in 2021, underscoring the significant role of digital finance in the country's economy. Last year, the Philippines ranked the highest in digital payments transactions in Southeast Asia. 

“Thanks to the rising adoption of e-commerce and mobile payments and an emerging generation of young and tech-savvy users, the digital payments market is now experiencing a surge in growth,” said Earl Melivo, Head of Asia Pacific at WorldRemit Philippines. “This has allowed the digital economy to remain robust through the pandemic, and has even cultivated an investor-friendly climate in the Philippines.”

True enough, despite a global downturn in investment, the Philippine market has exhibited resilience, with 2022 marking a 7% growth from the previous year and an all-time high in funds raised by startups. In the same year, overseas Filipino workers were encouraged to make the most of global headwinds to put up their own investments.

The 2023 report attributed high digital penetration rates to the increasing accessibility and functionality of smartphones among Filipinos. By 2028, the Philippines is estimated to reach an all-time high of 94.06 million smartphone users.

Access to smartphones and apps have been vital to providing more Filipinos with essential services in a country where 44% or 34.3 million adults remained unbanked until 2021. Unmet needs or tensions, such as long application processes for traditional banks and high overhead charges, have thus driven the demand for digital solutions, such as online transfers.

“These transfers have emerged as a game-changer, surpassing traditional methods by providing a seamless and user-friendly experience. Filipinos can now send and receive money anytime, anywhere, at their convenience, through their mobile devices,” Melivo said.

In 2022, local e-wallet transactions amounted to $28.6B—almost double the amount in 2020. This ranked the Philippines as the country with one of the highest mobile wallet transactions in the region, next to Indonesia and Thailand. By maximizing e-wallets Filipinos gain access to a wide range of financial services, including savings accounts and loans.

Beyond that, digital financial services empower more individuals and families through greater financial inclusion.

“Digital platforms like WorldRemit promote financial inclusion in the Philippines by bringing remittances to recipients who previously didn’t have bank accounts or live far from physical remittance centers,” Melivo said.

"By leveraging technology, tech companies like us can contribute to Filipinos’ financial well-being and literacy and provide inclusive and impactful solutions that cater to their evolving needs," he added.