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The BSP Has Issued the First Digital Bank License to a Purely Digital Bank

It’s a milestone for the Philippine operations of a Singapore-based neobank.
ILLUSTRATOR WARREN ESPEJO
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The Bangko Sentral ng Pilipinas (BSP) has received numerous applications for a digital bank license, but for the first time, it has granted one to a purely digital bank in the country. 

Tonik, a 100 percent digital-only bank whose holding company is based in Singapore, announced on Monday (June 7), that it has officially secured a digital bank license from the BSP. While the regulator has granted digital banking licenses to legacy banks, such as CIMB and ING, this is the first time it issued one to a neobank, or a financial technology company that offers internet-only services, with no physical branches. 

“Securing a digital banking license is one of this year’s anticipated milestones for us,” says Greg Krasnov, Tonik founder and CEO. “This will help us further strengthen our foothold in the neobanking space through accelerating the roll out of our additional lending and payment products.” 

The BSP had earlier granted a rural bank license to Tonik in December 2019, allowing it to provide retail banking services focused on retail deposits, card payments and consumer loans. After the BSP formally issued the guidelines on the establishment of digital banks (BSP Circular 1105) a year later in December 2020, Tonik applied for a formal digital bank license.

BSP Circular No. 1105 requires applicants for a digital bank license to put up a minimum capital of P1 billion as well as allow currently established brick-and-mortar lenders to convert to digital banks. 

Tonik says it has recorded over P1 billion in retail deposits less than a month after it formally launched in the country in March 2021. Two months later, the company announced that it had secured $17 million (P810 million) in pre-Series B funding.  

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“We are truly privileged to be working with a regulator such as the BSP who shares the same vision of bolstering financial inclusion in the country,” says Long Pineda, Tonik country president. “An official digital bank license will enable us to offer more products and services to narrow the gap between the banked population and the huge underserved segment in the Philippines.”

Tonik offers a suite of retail financial services, including deposit interest rates of up to six percent per annum (for its time deposit product with a term of six months). It also has separate savings pockets (which it calls Stashes) for specific items depending on the needs of depositors, such as for emergencies, vacations, tuition, etc.

Based on Tonik’s own calculations, the Philippines is home to a potential $140 billion retail deposit and unsecured $100 billion retail lending opportunities. Besides Manila and Singapore, the company operates hubs out of Chennai in India, and Kiev in the Ukraine.

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Paul John Caña
Associate Editor, Esquire Philippines
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