Tonik approved for digital banking license in the Philippines

Written by || January 22 2020

The Philippines has issued a digital banking license to Tonik Financial, a Singapore-based fintech. The firm claims to be both the first native digital bank in the Philippines and the Southeast Asia region. The Philippines central bank, Bangko Sentral ng Pilipinas (BSP), approved Tonik for a license that will allow it to offer a full range of retail banking services, with a focus on retail deposits and consumer loans.

Tonik arrives in a fledgling digital banking market. Cash still accounted for 99% of local transactions in the Philippines as of 2018, according to the BSP. The central bank reckons that just 12% of the adult population has e-wallets. Digital payments providers say the figure is higher at 31%, according to Rappler, a social news network. That's relatively low compared to the 58% of adults in Thailand with digital wallets and 66% in Indonesia. However, surveys consistently show Filipinos are willing to use cashless payments. It's just a question of persuading them to do so more regularly.

A survey published by Visa in September 2019 found "double-digit growth in terms of spend and transactions made by Filipino cardholders." 84% of respondents to the survey said that they are willing to use contactless payments.

"There is still a lot of opportunity for cash displacement in the Philippines," Dan Wolbert, Visa's country manager for the Philippines and Guam, told PhilStar Global in September.

In a press release Tonik highlighted what it sees as the Philippines' strong potential as a digital banking market: a US$140 billion retail deposit market and a US$100 billion "unsecured consumer lending opportunity." The Philippines is also well suited for digital banking because of its youthful, connected population and large number of adults without bank accounts. Data from the BSP show that about 77% of Filipino adults do not have a bank account. Tonik referenced market research that said about 50% of current retail bank consumers in the Philippines would be eager to switch their deposits to a pure-play digital bank. 

Tonik's team has extensive experience in both traditional and digital banking in emerging markets. Founder & CEO Greg Krasnov previously co-founded four fintechs in Asia and a consumer finance bank in Europe.

Filipino regulators are highlighting Tonik's ability to boost financial inclusion in the Philippines, an ongoing central government initiative in which fintech plays a key role. "We have always welcomed players who offer reliable and inclusive financial services through innovative solutions," Chuchi G. Fonacier, Deputy Governor of BSP's Financial Supervision Sector, said in a statement.

"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," he added.