Tonik's CEO says 9 in 10 Filipinos have never had a bank loan

Greg Krasnov, founder and chief executive of Tonik Digital Bank, went on ANC's Startup on Thursday and said the hard part of Philippine banking is no longer moving money around. It is lending it out. By his estimate, about 90 percent of Filipinos have never taken a loan from a bank.

He put a number on the hole. Around 100 billion US dollars of what he calls mass-market credit is simply not happening in this country. Payments, he said, have already been figured out, mostly by GCash, and there is little money left to make there.

What credit inclusion actually means

It means being able to borrow from a regulated lender at a fair rate. Most Filipinos cannot, and the reason is circular. Banks decide using your borrowing record, but you were never given a first loan to build one. No record means no score, no score means no loan. So people borrow from whoever will say yes, at whatever price that person names.

A scorecard from Vietnam, or Indonesia, or Latin America is just not going to work in the Philippines. It's a very different market with very different conditions.

Krasnov said Tonik deliberately slowed its own deposit growth, because cash sitting on the balance sheet with nowhere to lend it loses money. He said the bank's loan book grew 2.3 times last year, after growing 2.1 times the year before, and that two to three times a year is still within reach.

The catch to watch

These are the numbers of a man describing his own strategy. The 90 percent and the 100 billion dollars are his estimates, not central bank counts. And his own point about scorecards cuts both ways: nobody has yet proven how to lend safely and at scale to a Filipino who has never borrowed before, which is exactly where lenders lose money. Worth watching, because the Bangko Sentral ng Pilipinas is reviewing applications for more digital bank licenses, and Krasnov says he wants the competition.