Tonik Financial, the first pure-play digital bank in Southeast Asia, announced that its Philippines subsidiary has received regulatory approval to provide digital banking services in the country.
The approval from the Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, comes as a positive development for the country, which has largely been bypassed by a surge in digital banking in Asia in recent years.
Tonik Financial said its subsidiary – Tonik Digital Bank Inc – has received notice of approval for a new banking license that will enable it to provide a full range of retail banking services, focused primarily on retail deposits and consumer loans.
The Philippines had the lowest digital-banking penetration of any Asian market even as smartphone and Internet usage in the country is similar to elsewhere in developing Asia, according to a 2014 survey conducted by consulting firm McKinsey & Company.
In the same study, McKinsey found that 65 per cent of respondents will consider opening an account with a trusted digital bank.
European bank ING launched the country’s first digital bank in November 2018. Malaysia’s CIMB Bank also launched its all-digital mobile-first banking app called OCTO last year while local banking major Philippine National Bank followed suit.
The country represents a $140-billion retail deposit market and a $100-billion unsecured consumer lending opportunity, Tonik said. It added that over 70 per cent of the adult population remains unbanked and market research indicates that over 50 per cent of existing bank clients would be keen to switch their deposits to a pure-play digital contender.
Data released by the central bank on Wednesday showed bank lending grew by 10.1 per cent in November 2019, faster than the 9.3-per cent expansion in the previous month. Notably, loans from universal and commercial banks for household consumption grew by 26.6 per cent in November from 26.7 per cent in October due to faster growth in motor vehicle loans during the month.
“Tonik believes that Philippines banking sector is ripe for a digital disruption, and will follow the lead of other markets globally, where digital-only neobanks have rapidly captured millions of customers and attracted over $5 billion of investor funding in the last two years alone,” Tonik said in a statement.
Founded in 2018, Tonik is launching operationally in 2020 in the Philippines through its own bank license, with support and R&D functions based in Singapore and Chennai, India.
The approval of Tonik Digital Bank Inc’s digital banking license is part of the central bank’s effort of bringing banks closer to the Filipinos, said Chuchi G. Fonacier, Deputy Governor in charge of Financial Supervision Sector at BSP.
“We have always welcomed players who offer reliable and inclusive financial services through innovative solutions,” Fonacier added.