A Tonik in the Philippines’ banking scene

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Hello reader,

In 2022, two digital banks were launched in Singapore: GXS Bank, operated by the Grab-Singtel consortium, and Trust Bank, backed by Standard Chartered Bank and FairPrice Group.

There was – and still is – a fair bit of buzz about them, but I’m not quite sure how well they will fare in Singapore. After all, bank account penetration in the city-state stands at 98%, according to the World Bank. Digital banking is commonplace and most of the population has ready access to financial products such as loans and investments.

However, this isn’t the case in many other parts of Southeast Asia. Consider the Philippines, where nearly half of the adult population remains unbanked. This is where digibanks can make a tremendous difference, and in today’s premium story, my colleague Samreen takes a closer look at one of them.

Today we look at:

• What Tonik Digital Bank’s been up to and what it has in the works
• Xendit’s expansion to Malaysia
• Other newsy highlights such as TikTok Shop’s 2021 gross merchandise volume (GMV) in Southeast Asia and Microsoft’s plans to invest in the firm behind ChatGPT

Premium summary

A Tonik for your banking needs

Tonik Digital Bank (TDB) is an OG in the Philippines’ banking scene, being the first neobank to secure a digital bank license from the Bangko Sentral ng Pilipinas, the country’s central bank. Here’s a look at how things are going.

• Hello, lender: According to TDB, there’s tremendous potential for unsecured consumer lending in the Philippines. The bank’s betting heavily on this untapped market, with a loan portfolio targeted at retail customers rather than SMEs – though it also serves self-employed individuals. It has launched several lending products such as Quick Loan, Flex Loan, and Big Loan.
• Time to scale: According to CEO Greg Krasnov, TDB has focused on attracting deposits in its initial phase and spent most of 2021 and 2022 rolling out the loan products, which are in various stages of product-market fit. This year will be all about bringing those products to maturity and achieving unit profitability.
• Looking ahead: TDB’s net interest income was negative for 2021. While this is not sustainable, it’s important to note that its loan products are young. As the bank ramps up its lending, it should see improvements in its financials. TDB has demonstrated as well that it can attract deposits, but the real challenge is in turning those deposits into profitable loans to consumers.

Read more: From build to scale: Tonik Bank eyes unit profitability in 2023

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