The first traces of the modern banking system can be traced back to the 14th century in Europe, or Italy, to be more specific. The banking sector has undergone major developments in the next 6 centuries. However, no one had more of an impact on the users than the introduction of digital banks. These are banks that don’t have any physical branches and conduct their whole business digitally. One such bank which has been making strides in the Southeast Asian market is Tonik Bank. This is an all-digital bank catering to audiences across the Philippines. Founded in 2021, Tonik emerged as one of Asia’s most promising prospects in digital banking.
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Founders: Leader With A Knack To Drive Change
Tonik Bank was founded in 2021 in the Philippines by Greg Krasnov, a Ukranian national. After completing his primary education, Greg went to the USA to pursue an MS in Finance, accounting and political science from Arizona University, where he passed Summa Cum Laude. Then, he went to the University of Cambridge to pursue an M.Phil in international relations. After working in the banking and finance industry for almost 2 decades, Greg wanted to reduce the disparity in the accessibility of banks in Asia, particularly in the Philippines. As a result, Tonik Bank was founded to address the significant unbanked population in the Philippines by providing accessible and user-friendly digital banking solutions.
Growth and Market Position
Tonik has demonstrated significant growth since its inception. In 2023, it became the first non-captive digital bank in the Philippines to achieve positive lending unit profitability across its three lending product lines: Salary Loans, Shop Installment Loans, and Cash Loans. This achievement enabled Tonik to accelerate the scaling of its new loan production, which, as of June 2024, increased by 133% year-on-year, according to Tonik. Consequently, Tonik’s loan portfolio expanded by 94% over the twelve months ending June 2024, positioning it as a leader in mass-market consumer lending in the country.
The bank’s Annualized Revenue Run Rate (ARR) reached USD 19 million at the end of Q2 2024, driven by a 78% year-on-year increase in lending income. This substantial growth has led to a notable reduction in cash burn, providing strong visibility to Tonik’s path to profitability, which is expected in 2025.
Products Offered
Tonik offers a variety of digital financial products tailored to meet the needs of its customers in the Philippines. Most of the products are just like the ones offered in traditional banks:
Savings Accounts: High-interest savings accounts with competitive rates encourage users to save more effectively.
Time Deposit: Fixed-term deposits offer attractive interest rates for longer-term savings.
Stashes: Sub-accounts that allow users to segregate funds for specific goals or expenses.
Loans: Unsecured, collateral-free loans accessible through the Tonik app provide quick and convenient credit access.
Debit Cards: Physical and virtual debit cards for seamless transactions and payments.
Acquisition
In 2022, Tonik started doing well in the banking sector in the Philippines. As a result, it acquired TendoPay in December 2022. Tendo Pay is a money-lending app that does not require the borrower to have a debit or credit account. Moreover, the lending process is quite simple and only takes about 48 hours to complete.
Financial Performance
Tonik’s financial performance has been robust, with significant loan portfolio and revenue growth. In the last twelve months, the bank’s consumer loan portfolio growth rate far exceeded that of the digital bank sector, which grew its loan portfolio by only 10%, and the broader banking sector’s consumer loans, which increased by 18% during the same period.
This exceptional growth underscores Tonik’s effective business model and its appeal to the mass-market consumer segment.
Future Outlook
With a clear path to profitability expected by 2025, Tonik is poised to continue its trajectory of growth and innovation in the Philippine banking sector. The bank’s commitment to leveraging technology, understanding customer needs, and expanding its product offerings positions it well further to solidify its market leadership in the coming years.
Changing The Banking Sector, One Nation At A Time
Tonik Bank’s emergence as a digital-only neobank in the Philippines significantly advances the country’s financial services industry. By providing accessible, efficient, and customer-centric banking solutions, Tonik is pivotal in driving financial inclusion and setting new standards for digital banking in the region.
