Tonik Digital Bank, founded by Greg Krasnov, is on track to become profitable by the end of 2025, a little more than four years after launch. The Singapore-based but Philippines-focused bank is not just enjoying growth but has adopted a lending-first business model, in a market where others have prioritized payments, and where the biggest success stories in addressing the unbanked have been e-wallets.
Tonik’s initial test was simple: how quickly could it attract retail deposits and build out a loan book? The answer came swiftly. By its third year, Tonik had amassed $150 million in deposits, so quickly, in fact, that the bank had to put the brakes on its deposit-gathering efforts.
The bank had become overfunded relative to its loan book, with a significant portion of funds sitting idle at Bangko Sentral ng Pilipinas, the central bank – a costly proposition when interest rates declined. Tonik cut its deposit base to around $100 million. Today, Tonik boasts a loan-to-deposit ratio of 65 percent, the best among digital banks in the Philippines, says Krasnov.
The $100bn TAM
But gathering deposits is only half the battle. For Tonik, the real test is making profitable loans to a segment that is largely new to formal borrowing, banking, and credit. “That’s 90 percent of Filipinos,” Krasnov told DigFin, pointing to a $100 billion asset class that remains largely untapped.
The challenge, however, is formidable. The Philippines lacks a single national identity card and has no open banking infrastructure, making it difficult to assess creditworthiness in a population with little to no financial history.
Tonik has responded by developing proprietary scorecards that leverage alternative data, often sourced through partnerships with large employers and retailers. This channel strategy enables Tonik to market both deposits and loans directly to employees and customers of these organizations, deepening its reach into the mass market.
The results? Tonik’s loan portfolio has grown tenfold over the past two and a half years, now standing at $65 million, with annualized revenue of about $37 million. Krasnov expects to double this revenue figure in the coming year. Importantly, Tonik now operates with a positive contribution margin, and Krasnov projects that the bank is just two or three quarters away from full cash-flow breakeven. Tonik’s risk-adjusted return on capital stands at 25 percent, placing it among the top five consumer lenders in the country, Krasnov said.
The key threshold is to build the loan portfolio to $100–120 million, which he says the bank is on track to reach by the end of 2025.
What’s inclusion?
DigFin asked what Krasnov makes of this as a means of improving financial inclusion in the Philippines. He says basic current-account and payments access has already been solved by the big e-wallet providers, such as GCash. “They’ve onboarded everyone,” he said. “Tonik is about credit inclusion.”
And that story has a long way to go. He reckons all digital lenders now have collectively a “few billion” of assets, that’s negligible against the $100 billion opportunity in unbanked consumer credit.
To that end, Tonik has prioritized lending since inception, rather than payments and debit cards, as many of its competitors do.
“Payments margins in the Philippines are too low, and revenues will never match the cost of customer acquisition without a robust lending business,” he said.
Funding model
For Tonik, loans are the primary means of acquiring customers, with payments and other products layered on as engagement tools. About 40 percent of loan clients take up a current account offer, which is used primarily for payments and as a platform for further upselling. Insurance has also been added to the mix, with two payment protection products—one underwritten by a local insurer, the other by Tonik itself—bundled with loans and taken up by about 70 percent of customers. Investment products are on the horizon as Tonik seeks to further increase the lifetime value of its customers.
Tonik’s funding model is another key differentiator. The bank has raised approximately $150 million in venture capital from a roster of prominent investors, including Peak VX (formerly part of Sequoia), Point72, Mizuho Bank, and Insignia, each holding 10–12 percent of the company. Management retains a 25 percent stake.
But these moneys went to launching the bank, but they aren’t meant to fund the business itself. Fintechs that facilitate peer-to-peer lending, for example, rely on wholesale funding, which is 3-4 times more expensive than the deposit funding that a bank enjoys. Tonik’s banking license gives it access to the country’s $350 billion retail deposit market. “Customer deposits are a cheap and scalable raw material,” Krasnov said.
Wholesale is not only pricy but limited in supply. “The biggest wholesale credit line I’ve seen is $50 million,” Krasnov said. “You can’t get $1 billion worth of loans, there’s no securitization market, and most banks won’t lend to these customers. Being an e-wallet or P2P lending fintech isn’t enough: you must become a bank.”
Next capital raise
The very nature of banking brings its own set of capital constraints, however. As Tonik’s loan book expands, so too does its need for equity capital to meet regulatory capital-adequacy requirements. The bank must maintain shareholder equity equal to 10 percent of its risk-weighted assets, a rule that will necessitate a Series C funding round, likely in the $40–50 million range, sometime in 2026.
The mantra for now is grow and scale, by finding new customers and upselling existing ones. A typical product is to offer through employers a revolving credit line of double the person’s monthly salary. These unsecured loans are spent on education, medical expenses, home improvements, or travel. Tonik also has a product specifically for purchasing home appliances, which can be repaid by installment.
The bank’s credit scoring makes bigger offers, on better terms, to customers that pay back in time. About 40 percent of original customers return for additional loans.
Looking ahead, Tonik’s ambitions remain firmly anchored in the Philippines, a market Krasnov sees as offering both depth and scalability. He draws a parallel to Brazil’s NuBank, which raised $50 billion at IPO on New York Stock Exchange with 90 percent of revenues still coming from its home market. “Here it’s similar: there is depth in the Philippines,” he said.
Expansion into Indonesia or Vietnam is less attractive, given the greater competition, higher digital penetration, and more challenging regulatory environments. The Philippines, by contrast, offers a supportive macroeconomic backdrop, with 5 percent annualized GDP growth and controlled inflation.
Krasnov said it’s too early to discuss the exit, be it a strategic sale or an IPO. But he did say, “We can scale to become a decacorn.”
