NEOBANKS OF THE WORLD: PHILIPPINES
Veteran fintech entrepreneur Greg Krasnov is boldly going where no bank has gone before in the Philippines Fintech entrepreneur Greg Krasnov knows a thing or two about spotting market opportunities. By the age of 46 he had already founded and then sold a consumer bank in Ukraine before moving to Singapore where he has co-founded four market-leading and award-winning fintech startups, CredoLab, AsiaCollect, AsiaKredit Bank and SolarHome, as well as creating the venture builder Forum. Now he has put his name – and his reputation – behind creating Tonik, the first digital bank in the Philippines, which was granted a banking licence by Bangko Sentral ng Pilipinas (the Philippines’ Central Bank) in early 2020. And the opportunity he has spotted? Quite simply, it’s this: Filipinos lead the world in terms of internet and social media usage but, astonishingly, 70 per cent of the 100 million-strong population remains unbanked. And with a growing middle class enjoying more disposable income in a
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ThePaytechMagazine | Issue 6
country that has an average age of just 24, Krasnov’s number-crunching tells him there is an untapped potential of US$140billion in retail deposits and US$100billion in unsecured retail lending out there. Explaining Tonik’s genesis, Krasnov says: “We see that there is massive demand from consumers in the Philippines who are very young, very digitally native, and they’re not being serviced with appropriate savings and term deposit propositions in the digital sphere by the incumbent banks.” He also believes the payment sector is overcrowded and sees much more potential in the lending space. But he is a fierce critic of the models used by any number of digital neobanks whose headlong rush to attract as many customers as they can before putting themselves on a solid financial footing puts their profitability, and even their futures, in peril. With an extensive background in private equity banking before becoming a fintech investor, Krasnov is a firm believer in marrying the basic tenets of banking with the very latest tech. And so enters Tonik. “The speed of scaling for Tonik will be determined by how quickly we can bring our core consumer lending proposition to profitability,” says Krasnov. Elaborating on his methodology, he says: “I’m a little old school. I spent the first 10 years of my career in private equity, thinking about EBITDA and leveraged
buyouts, and now I look at the neobanks that only have the liability side of the balance sheet and are scaling up and then posting ‘hey, I got all these users. Please value me based on user numbers’. “Evaluations based on user numbers on the liability side of the balance sheet, where the more users you have, the more money you lose, just makes no sense to me.” And so, no, Tonik is ‘not rushing into scaling’, he says. “What we’re going to really focus on is establishing our lending proposition, getting the cost, and especially the cost of risk, under control, which takes time. You need to train the risk models and that’s when you can really step up the scaling. “Our business model is not predicated on payments, as with a lot of neobanks; we’re very much an asset liability play, like Nubank in Brazil or Tinkoff in Russia.” Tonik has been more than two years in the making and, after initially being seed funded by Krasnov’s own venture builder Forum, it announced in June 2020 that it had secured US$21million in a Series A funding round, with a plan to launch in the third quarter of 2020/21. As you would expect from someone with Krasnov’s background and experience, much thought has been put into selecting the bank’s technology partners, with Finastra’s Fusion Essence Cloud, powered by Microsoft Azure, chosen for its end-to-end core banking, and BPC selected for its payment www.fintech.finance