AI seen to fast-track growth in Philippines lending

MANILA, Philippines —  Philippine banks could accelerate loan growth to as high as 15 to 18 percent with the adoption of artificial intelligence (AI)–powered lending systems, according to Intellect Design Arena Ltd., a global technology provider servicing major financial institutions.

Brajesh Khandelwal, executive vice president and head of lending at Intellect, said the Philippines’ credit expansion has been averaging around 12 percent in recent years, but AI-driven efficiencies in underwriting, loan management and collections could lift growth to “nearly 15 to 18 percent.”

“We do see it is getting increased to 15 to 18 percent as the banks address various bottlenecks in the entire lending process and that’s where we see AI playing a role,” he said, noting that traditional automation efforts are being surpassed by “digital experts” that accelerate decision-making and improve accuracy.

Khandelwal emphasized that the jump in loan expansion could happen as early as this year or in 2026, depending on how quickly banks adopt enterprise-grade AI platforms. “The banks that would lead this effort will certainly grow faster than the others. That’s the competitive advantage AI will give to the banks,” he said.

He identified micro, small and medium enterprises (MSMEs) as the strongest driver of future lending demand, followed by retail segments, including auto, personal and housing loans.

“We do see MSME being the growth engine. Every sector, every loan segment has the potential, but if you ask me, the highest lies in the MSME and corporate lending,” Khandelwal said, citing inefficiencies that delay approvals for smaller enterprises.

Based on central bank data, bank lending growth cooled to 10.5 percent in September from 11.2 percent in August, marking the slowest pace in over a year.

The outstanding loans of universal and commercial banks amounted to P13.7 trillion as of end-September, P1.3 trillion higher than the P12.4 trillion recorded in the same period last year.

Despite expecting faster credit expansion, Khandelwal sees non-performing loans (NPLs) remaining manageable as AI strengthens credit assessment and fraud detection.

“We are helping the banks to make faster decisions as well as make the right decisions. Because faster decisions will help the growth and the right decisions will help with credit quality,” he said, adding that the technology can triangulate financials, know your customer data, industry health and policy trends to guide underwriters.

He also pointed to emerging regulatory expectations such as transparency, non-bias in AI models, personal data protection and maintaining a “human in the loop” in final lending decisions.

Khandelwal said Philippine banks are still in the early stages of adoption. “Some experimentations are happening, but a serious adoption of AI still needs to be done,” he said.

Beyond loan origination, he said AI can enhance servicing and collections, automate document validation, summarize credit memos, detect anomalies and provide customer interaction through conversational digital agents.

Intellect Design Arena, which has worked with Philippine banks for over a decade, said its market positioning is strengthened by its local regulatory understanding and the eMACH.ai platform.

“We have already been a transaction banking as well as a core banking player in the Philippine market, and lending has been one of the very critical spaces we are focusing on,” Khandelwal said.

The company also cited implementations with top Philippine banks in auto loans and credit cards, as well as partnerships globally with central banks, tier-one lenders and fintech ecosystems.

Khandelwal said the momentum now lies with banks, which are ready to modernize their operations. “The efficiency that we are talking about that AI can deliver is being delivered as we speak,” he said.

Source: https://www.philstar.com/business/2025/11/28/2490291/ai-seen-fast-track-growth-philippines-lending