Salmon swims against the tide in digital banking

Salmon famously swim upstream to ensure the survival of their offspring.

Like its namesake, Philippines-based neobank Salmon did something that may seem counterintuitive – acquire a rural Philippine bank in January this year – in its quest to launch its offerings across Southeast Asia.

Salmon did not follow in the footsteps of Maya and GoTyme in applying for a digital banking license from BSP. Instead, it acquired the Rural Bank of Sta. Rosa, which is based in a city south of Metro Manila.

(From left) Salmon co-founders George Chesakov, Pavel Fedorov, and Raffy Montemayor / Photo credit: Salmon

Earlier this month, the Bangko Sentral ng Pilipinas (BSP) – the Philippines’ central bank – was reported to have started cracking down on companies acquiring rural banks to secure a Philippine license without having to compete for a digital bank license slot.

Another firm that took the rural bank acquisition route in the Philippines was Sea Group. The Shopee and Garena parent acquired Banco Laguna for the rollout of SeaBank Philippines.

But Salmon co-founder and executive chairman Pavel Fedorov rejects any suggestion that the acquisition was a form of regulatory arbitrage. In an interview with Tech in Asia, he stressed that the company “had to go through a very extensive due diligence to acquire the bank.”

Rather, the acquisition provided the firm with a vehicle to “move quickly” in order to capture its share of what Fedorov calls “one of the best markets” in the region.

Within just 27 months from its founding in July 2022, Salmon had raised US$75 million in total funding from the likes of Northstar Group and the International Finance Corporation.

Of that amount, US$55 million was raised this year, the third highest for a Philippine fintech firm in 2024. This puts Salmon behind only Maya and GCash, which are far larger and more established, in terms of funding.

Need for speed

“I think what many people don’t quite appreciate is the importance of being quick to market,” Fedorov says. He adds that a founder “might have a great vision, a great idea,” but it will be much harder to capitalize on it if a competitor comes out with a similar product.

As such, Salmon wanted to start things off fast. Without its acquisition, the company would have had to wait to apply for the proper license to start its banking operations.

In 2021, the BSP set a three-year moratorium on new digital bank licenses to better monitor the performance of the licensed financial institutions. Sea Group was also late to the party, only launching Sea Bank Philippines in 2022.

The moratorium will only be lifted on January 1, 2025.

Derailed by conflict

Up to 60% delinquencies