Tonik Financial has snagged $21 million in its Series A round and will be tapping the funds to kickstart its digital bank services in the Philippines next quarter. The move comes after it secured a bank licence there in January 2020.
Led by VC firms Sequoia India and Point72 Ventures, Tonik's latest funding round also saw participation from previous investors Insignia and Credence.
Its bank licence in the Philippines would enable the startup to provide retail banking services, focused primarily on retail deposits and consumer loans, it said. According to Tonik's estimates, the country's retail deposit market was worth $140 billion, while the unsecured consumer loans sector represented $100 billion in value.
Founded in 2018, the startup also has offices in Singapore and Chennai, India, which housed its support and research teams.
Its founder and CEO Greg Krasnov said in a statement Monday: "COVID-19 is causing consumers all over the globe to save more for emergencies, to care more about the safety of their money as well as about earning a fair interest rate on their deposits while having access to their funds for easy withdrawal and transfer.
"In the Philippines, where over 70% of the population remains unbanked, we are observing a rapid jump in consumer demand for digital banking and digital transfers since the start of the year," Krasnov said. "We are preparing to bring a highly differentiated experience to the Filipino consumer to address these needs."
Point72 Ventures' head of fintech investments Pete Casella noted that Tonik's ability to secure a bank licence as a digital-only bank was unique and would allow the startup to provide innovative products while tapping the benefit of bank economics.
Online consumers in the Philippines had an average age of 24 and led the world in terms of daily internet and social media usage, which Tonik believed put the country in good stead to be a global leader in digital banking, too. With more than 70% of the country's adult population unbanked, the company added that market research revealed more than half of existing bank customers were keen to migrate their deposits to a pure-play digital player.
Tonik's offerings included deposits, loans, current accounts, payments, and cards.
Singapore last year announced its own plans to issue up to five digital bank licenses as part of efforts to add market diversity and boost the banking system in the country, as it looked to become a digital economy. This meant that non-bank organisations would be able to apply for a license and offer digital banking services.
In April, it delayed its decision to announce the list of successful bidders -- originally slated to take place this month -- to the second half of the year, due to the coronavirus outbreak. Successful bidders were expected to commence business by mid-2021.
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