TONIK Digital Bank Inc received its banking license from the Central Bank of the Philippines this month; this fintech startup aims to provide retail banking services, focused primarily on retail deposits and consumer loans, through the first digital-only branchless bank licensed platform in the Philippines.
According to TONIK CEO Greg Krasnov, the banking sector in the Philippines is ripe for a digital disruption, and will follow the lead of other markets globally, where digital-only “neobanks” have rapidly captured millions of customers and attracted over USD 5 billion of investor funding in the past two years.
Krasnov claims the Philippines represents a USD 140 billion retail deposit market, and a USD 100 billion unsecured consumer lending opportunity.
Filipino consumers, with an average age of 24, constitute the number one market globally in terms of daily internet and social media usage. However, over 70% of the adult population remains unbanked, and Krasnov claims market research indicates that over 50% of existing bank clients would be keen to switch their deposits to a pure-play digital contender.
“Digital-only banks globally have successfully demonstrated their ability to take massive market share by launching hyper-compelling consumer propositions, while also operating at disruptively low unit costs, and thus generating outstanding Returns on Assets and Equity. We are honored to have been chosen by the regulator as a test partner in bringing these global best practices to the Philippines through the first digital-only bank license in the Philippines and indeed Southeast Asia. We believe that the regulator’s confidence in us serves as the testament to the unique strength and track record of our team and the attractiveness of our product philosophy. We look forward to bringing a new level of digital banking services to the Phillipines,” says Krasnov.
Commenting on TONIK’s entry into Phillipines, Bangko Sentral ng Pilipinas Deputy Governor Chuchi G. Fonacier says BSP aims to bring the central bank closer to Filipinos.
“We have consciously worked on ensuring that we maintain an enabling regulatory environment for responsible new financial system players. We have always welcomed players who offer reliable and inclusive financial services through innovative solutions. Thus, it is with great optimism that we welcome TONIK Bank in the Philippines and we look forward to exciting digitally-centered products and services and committed efficiencies that will benefit every Filipino,” says Fonacier.
Tech partner Finastra, says TONIK selected its Fusion Essence cloud product to power TONIKs end-to-end core banking capabilities in the Philippines.
On the partnership, Finastra General Manager Retail Banking Anand Subbaraman says TONIK is well positioned to replicate the disruption that has taken place in Europe, where digital banks have quickly attracted millions of customers and billions of dollars in investor funding.
“Using digital technologies and a lower-cost operating model, TONIK will be able to offer customers the products and services they need, delivered in a convenient way, as well as increasing opportunities for financial inclusion in Asia. Fusion Essence Cloud is ideally suited to help TONIK achieve these goals, as well as see a fast return on its investment. We are extremely proud to be TONIK’s partner in bringing digital banking to the Philippines for the first time,” says Subbaraman.
Krasnov claims the Philippines has high internet usage, wit the majority of Filipinos unbanked.
“Research shows half of the people who do have bank accounts would be interested in switching to a neobank. We want to create a hyper-compelling consumer proposition that will revolutionize the way money works in the region. Finastra’s Fusion Essence Cloud – powered by Microsoft Azure – will give us the agility to get these services to market quickly and efficiently,” says Krasnov.
(Ed. TONIK was founded in 2018 and claims it was seeded and built by FORUM, a fintech venture capital firm in Southeast Asia. TONIK says it will commence its Philippines operations in 2020 under its own bank license, with support and R&D functions based in Singapore and India.)