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Samreen Ahmad · · 5 min readFrom build to scale: Tonik Bank eyes unit profitability in 2023
Launched in March 2021 as a subsidiary of Singapore-based Tonik Financial Pte. Ltd., Tonik Digital Bank (TDB) is the OG of neobanking in the Philippines. It was the first neobank to secure a digital bank license from the Bangko Sentral ng Pilipinas (BSP), the country’s central bank.
Tonik Digital Bank founder and CEO Greg Krasnov/ Photo credit: Tonik Digital Bank
According to TDB’s estimates, the market for unsecured consumer lending in the Philippines – of which 90% is unserved – could be worth US$100 billion. For comparison, the total loan portfolio of the country’s banking system in 2021 was around 11 trillion pesos or US$197 billion.
The company is therefore betting heavily on this untapped market. Its loan portfolio is targeted at retail customers rather than SMEs, though it also serves self-employed individuals.
The Sequoia India-backed company has been on a building spree for the past two years, launching nearly four lending products such as Quick Loan, Flex Loan, and Big Loan.
See also: Banking on a digital remedy in the Philippines
Quick Loan is a small-ticket loan available to customers within 24 hours, while Flex Loan offers a larger loan amount to consumers who are employed or have an ATM card. Big Loan, one of TDB’s more recent secured loan offerings, allows customers to borrow against the value of their home.
In December 2022, TDB further expanded its range of loan products when it acquired Philippines-based TendoPay. The firm works with companies to provide payroll-enabled financial solutions to their employees.
The neobank has been focused on attracting deposits in its initial phase. In June 2021, TDB surpassed US$50 million in deposits in June 2021, six months ahead of schedule.
This year, however, is going to be the year of growth for the company, founder and CEO Greg Krasnov tells Tech in Asia in a virtual interview.
Between 2020 and 2021, operating expenses grew 6x largely as a result of employee costs. Since its launch almost two years ago, its parent firm’s headcount went up from 30 to nearly 600 across its subsidiaries.
The most recent available financials are from 2021, and these only provide limited insight into TDB because it expanded its range of loan products, the key revenue driver for any bank, in 2022.
“We launched an unprecedented lending product range in the region, and most of these are on pilot, so our current total loan portfolio has been below US$10 million,” Krasnov says. The neobank is planning to accelerate its loan distribution in the first and second quarter of 2023.
Year of scaling up
Net interest income analysis
Rebalancing for future
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The Sequoia India-backed company has been on a building spree for the past two years, but this year will be all about bringing those products to maturity.
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