‘Enabling financial freedom’: How
Tonik is
redefining the banking experience
PROJECT PARTNER
‘Enabling How banking
‘Enabling
financial freedom’: Tonik is redefining the banking experience
Greg Krasnov, CEO of Tonik Bank, highlights the pioneering work being done by the digital-only neobank to bring about financial freedom in the Philippines.
A transformative digital-only neobank, Tonik Bank (Tonik) is dedicated to revolutionising the money works in Southeast Asia.
the way Asia.
he company was founded in 2021 to address the prominent levels of unbanked people in the Philippines, with elevated demand for improved financial services rising during the COVID-19 pandemic.
But how is the company’s unique model empowering its customers, and what are the technical innovations it’s deploying to facilitate this transformation?
Here to tell us more is CEO and Founder Greg Krasnov.
To begin, Greg explains the thought process behind the development of Tonik.
“Tonik was created because the Philippines has an acute problem with credit inclusion at the mass market level,” says Greg. “If you look at statistics around the world, the Philippines is by far one of the lowest on a per capita basis in terms of unsecured consumer lending, and it’s about three to four times below the average for Southeast Asia.
“Historically, legacy banks in the Philippines have not been very proactive in targeting the mass market, with close to 90% of all their lending concentrated in the corporate segment. This creates a paradoxical situation where we have $300bn of deposits in the banking system in the Philippines, but only $30bn of that is lent to consumers on an unsecured basis. This is what Tonik is here to solve.
“We’ve now had three and a half years of operating history, which has allowed us to figure out how to profitably lend to Filipino consumers. I want to underscore the word profitably here, because while it’s easy to give money out when you’re a lender it’s not always easy to get that money back.
“90% of Filipino people don’t have any credit history. To operate in a market like this, you need to learn to assess people for credit capacity and propensity to repay. This means we need to build proprietary credit models and figure out what channels we can
enter to access clients through a riskmitigated fashion, so we can do justice to our depositors.
“I’m incredibly happy to say that we are the first digital bank in the country to achieve unit profitability on our consumer lending products, and the only one that offers all three of the following services: payroll deduction loans, shop instalment loans and cash loans. By offering these services, we’re able to widen our catchment area and scale upwards. We’re now the growth leader in this space and we are rapidly accelerating production.”
As the first all-digital bank in the Philippines, Tonik’s unique operational model has led to a oneof-a-kind operational model.
“Tonik is purely a digital bank,” explains Greg. “We don’t have branches, we don’t even have a web front end where users can find us. You can only access us through our app. Effectively, innovation is at the core of what we do, and no one’s done it in the Philippines like this before. In fact, very few people in the world are doing what we’re doing.
“We were the first neobank in Southeast Asia to launch with a full banking licence, which created specific challenges when marrying the culture of innovation with regulatory compliance and ensuring that we meet banking standards. This has led to a unique culture, marrying our banking values of reliability, teamwork and honesty with tech company values of innovation and a sense of humour embedded in everything we do.”
This sense of humour has played a significant role in the bank’s approach
to customer experience (CX), which Greg believes is refreshing for users who have previously seen banks as elitist, inaccessible organisations.
“I’m very happy to say that we are by far the most awarded bank in the Philippines when it comes to CX,” celebrates Greg. “Since the start of this year, we’ve received numerous awards for it. Our customers love the CX that we’ve created – the onboarding and process of using the app is very straightforward.
“I think what really appeals to our clients is our branding. When we were designing the app, we faced the challenge of figuring out how we break through into that mass market in the Philippines on a messaging level. Through our market research, we found that, traditionally, banks have been seen in this market as ‘By the rich, for the rich.’ That’s something that we very proactively tried to break away from when we designed our branding.
“The task we presented to our marketing and branding team was: ‘How do we get Filipino people to fall in love with us?’ The answer we got back from them was that we needed to get the customer to fall in love with us by flirting with them. So, we’re playful with our brand, we call our referral programme ‘friends with benefits’ and our customers ‘luvs’ and ‘huns.’
“This approach to messaging permeates our branding and the entire customer experience, built across all channels. We’ve found that this has created a very organic flow, so we don’t have to spend as much money on marketing to attract our customers and get them to stay with us.”
And this approach has been a successful one. Tonik has been the recipient of several awards over the past couple of years, including:
1. Statista and Philippine Daily Inquirer: Philippines’ Best Customer Service 2023
2. Global Banking and Finance Review: Most Innovative Digital Bank Philippines 2024
3. The Digital Banker: Best Digital Bank for CX 2024 (Country award)
4. Asian Banking and Finance: Retail Banking Awards: Virtual Bank of the Year 2024
5. Asian Business Review: Asian Technology Excellence Awards: Philippines' Technology Excellence Awards for Digital Banking
6. Brands and Business Magazine: Best Digital Bank Philippines 2024
7. Asian Business Review: Asian Experience Awards: Philippines Customer Experience of the Year –Banking
Beyond Tonik’s innovative and distinctive approach to engagement and messaging, the neobank has further developed its user experience with the implementation of AI chatbots – solving customer enquiries quicker and more efficiently. However, the company is paying close attention to ways AI can transform the banking industry in the long term.
“I think there’s short-term operational and long-term strategic aspects to AI and how it pertains to our operations,” elaborates Greg. “Before, we were looking at it from that short-term
perspective, but we’re now really seeing what it can do for us as a business.
“We implemented a ChatGPT-driven chatbot in our customer service, which has done wonders for our efficiency. Our live chat is how 90% of our customers interact with us – very few of them will want to talk to us on a call.
“It’s the perfect environment for us to implement an AI-driven bot and the majority of our customers are now getting their enquiries fully addressed without any human interaction. This has done wonders for our operational
efficiency and is continuing to drive down costs.
“We’re also deploying machine learning and AI capabilities on the credit side of things, to attract the right customer profiles. This helps both potential customers in terms of placing our advertisements to the right people, and us, in terms of reducing our customer acquisition costs, ultimately resulting in an improvement in the company’s overall cost structure – that we subsequently translate into better interest rates for the customer.
“We leverage machine learning in terms of training our credit models to make good credit decisions. So, there are a number of aspects where AI is already embedded in our operations, but I believe that there will be a broader strategic shift over the next decade or two.
“We’ve had multiple generations of banking – branch banking, phone banking, internet banking and now digital banking. This is the app-based approach that we’ve adopted, where engaging within an app is the primary mode of interaction.
Identity Continuity on the Daon IdentityX™ platform lets market disruptors like Tonik Bank meet their customers where they are, increasing access and building loyalty.
This all-encompassing service delivery approach— from eKYC, to authentication, to account recovery —gives you the tools you need to treat each customer as an individual, and it’s only available through Daon.
“We take a very collaborative approach with our partners, and it’s critical for us to work alongside companies like Daon, who are world-class in their respective fields and have the capabilities to be agile”
“I think the next level of interaction will be a conversational bot, which is a much more natural mode of communication for us. Instead of filling out applications, you’ll be talking to a chatbot as easily as you would talk to a friend. Banks need to be getting ready for this transition because there’s a big strategic shift we’ll be seeing in the next few years, and you need to have the infrastructure in place.”
A significant aspect of Tonik’s preparation for shifts in the financial industry has involved building a robust partner network, comprised of industry leaders deploying state-of-the-art solutions.
“When we were launching the bank, we decided that we weren’t going to reinvent the wheel,” recalls Greg. “To launch a digital bank, you need a certain number of functionalities, and most of these are available on the market to be bought instead of developed from scratch.
“We actually integrated over 20 vendors when first launching our solution, and we now have a couple dozen more. One of our largest tech vendors is Daon, who provide several functionalities for us, including electronic Know Your Customer (eKYC) verification. There’s a whole suite of services that they’re providing
“It’s a tremendous rate of growth that we’re now experiencing, and it’s incredible to see. Every loan we grant means more credit access, which means enabling financial freedom, which means empowerment for people in the Philippines”
Tonik Bank, and it’s been a great partnership for us.
“We take a very collaborative approach with our partners, and it’s critical for us to work alongside companies like Daon, who are worldclass in their respective fields and have the capabilities to be agile. Launching a bank like this has been very intense over the past few years, and we’re incredibly lucky to have strong partners who can work with us like this.”
Looking ahead, Greg is optimistic about the future growth of Tonik –and the role the bank will continue to play in transforming financial freedom for its users.
“What I’m most excited about is solving the credit inclusion problem in the Philippines,” says Greg. “Early on in my life I was a refugee from the Soviet Union, and I went through the credit inclusion cycle myself, so
I know personally what that can do for upward mobility. I’m very inspired to be able to enable that for other people.
“The last three years have been a tremendous learning experience for us, and last year in particular has been a critical milestone year in terms of solving unit profitability. Now we’re past that hurdle, it’s all about scaling –and scaling fast. In the first six months of 2024, we more than doubled our new loan productions, with a target to grow our loan portfolio this year by between three and four times from the start of this year.
“It’s a tremendous rate of growth that we’re now experiencing, and it’s incredible to see. Every loan we grant means more credit access, which means enabling financial freedom, which means empowerment for people in the Philippines.”
Learn more about Tonik here.
Street smarts
“We really value street smarts in our company, which some might say isn’t particularly prominent in the banking industry!” says Greg. “To facilitate that, we’ve got many clubs and activities within Tonik that can help with team building to that end.
“One of our clubs that’s particularly close to my heart is MOTONIK, our motorcycling club. A lot of our people – myself included –really enjoy motorbiking, and we regularly hold group events. Last year, our Chennai office had an amazing rally, with over 20 bikes going from Chennai to a neighbouring city and back.
“Riding a motorcycle at peak rush hour in India definitely requires a lot of street smarts and an incredible sense of humour, because at any moment a cow might lay down in the middle of the highway or you might end up in the middle of a market. This was a really exciting event for us, with more than forty participants, and it was great to bring everyone together in a bit of an unconventional way.”
Connect with Greg