The digital lending market in the Philippines is poised for a significant expansion, with expectations to grow by 45.4%, reaching $488.8 million this year, from just $336 million a year earlier.
This forecast, as per the latest report by PayNEXT360, a research and consulting firm with offices in the United Kingdom, the United States, and India, indicates a “rampant surge” in the sector over the next four years.
According to PayNEXT360, the adoption of alternative lending channels in the Philippines is growing at an average annual rate of 36.2% during the forecast period from 2023 to 2027.
This growth trajectory suggests that the market could reach a valuation of $1.68 billion by 2027. The report attributes this significant growth to the increasing presence of digital banking service providers, including neo-banks and financial technology (fintech) firms, in the Philippine market.
PayNEXT360’s report defines alternative lending as encompassing a range of services from personalized business-to-consumer options like payroll advances to strategic business-to-business solutions such as lines of credit.
The payment instruments for these transactions include various forms such as cash, checks, credit transfers, direct debits, debit cards, credit cards, and e-money.
A key factor driving this growth is the high percentage of the unbanked population in the Philippines, coupled with a growing demand for credit in the current macroeconomic environment. This scenario has led to an increase in consumers turning to alternative lending providers in 2022, as highlighted by PayNEXT360.
The report’s findings underscore a significant shift in the financial landscape of the Philippines, marking a move towards more inclusive and accessible financial services, driven by digital innovation. This trend reflects a broader global move towards digital financial solutions, particularly in emerging markets.