RCBC, Tonik Digital talk financial inclusivity in the PH

Digital banking platforms have been at the heart of the financial technology revolution in the Philippines, offering simple and accessible financial solutions on smartphones to the marginalized. At the Fintech Revolution Summit in Manila, some industry leaders spoke to CoinGeek about the rise of digital payments and why they are the foundation of the country’s digital future.

The Philippines’ first digital bank

While there are dozens of digital payment solutions in the Philippines, only six have received a license from the central bank to operate as digital banks. Tonik Bank—alongside Maya—was the first to receive this coveted license in early 2022. It hit the one million customers mark in June last year.

Tonik’s chief product officer, Edmon Joson, told CoinGeek’s Claire Celdran that the bank has focused on financial inclusion since its launch. It has integrated various technologies to offer the best products “because when you’re addressing a market like the Philippines, having the right technology enables you to serve the market better.”

While the Philippines has made great strides in promoting financial inclusion, four in ten adults remain unbanked, according to the latest study by the Bangko Sentral ng Pilipinas (BSP).

“The opportunity is really there to serve the underbanked. A lot of customers really need these services. They are hungry for access to credit, credit scores, and other financial services,” Joson said.

One key impediment to banking the marginalized is a lack of identity documents, which are required for KYC, according to Joson. However, recent government initiatives are solving this challenge.

“The initiatives of the BSP and providing our Philippines ID is such a great boon to our bank and other digital banks,” he said.

Tonik is a branchless bank with many challenges. For instance, it’s unable to target specific regions with a higher unbanked rate in the same way a local bank branch could.

However, this all-digital approach also allows Tonik to make onboarding easier and more accessible than with physical branches. Users can instantly make deposits and apply for credit facilities once they download the app and provide their KYC information.

“It’s all about access,” he stated. “The big benefit is that we, as a bank, can be accessible to customers anywhere they are, at any time, through their devices. They have immediate access to all our services and their funds,” he pointed out.

A vast opportunity

In theory, digital banks compete for the same clientele as traditional banks and should be rivals. However, Michael Ricafort says the pie is big enough for everyone.

Ricafort is the chief economist at the Rizal Commercial Banking Corporation (RCBC). Speaking to CoinGeek, he noted that “everybody has their part, from the banks to the fintechs and the non-banks.”

“That would further democratize the financial markets and services such as borrowing and loans, deposits and investments, and the payment system,” he added.

Ricafort’s assertion is reiterated by multiple reports from some of the world’s top banks, which all rank the Philippines as one of the best investment destinations. The country’s embrace of digital technology, coupled with a young population and increased government digitalization, make the Southeast Asian nation one of the countries poised for massive economic growth.

“With increased financial literacy and financial inclusion, everything else would improve. That would further democratize financial services, especially in the far-flung areas, where digital banking would be key,” he said.  

While the potential is undeniable, Ricafort acknowledged that some hurdles remain. These include limited access to the internet in some remote regions of the country. Data shows that internet penetration in the Philippines is around 75%, indicating room for improvement.

Despite the challenges, Ricafort told CoinGeek that digitalizing financial services is inevitable in the Philippines and beyond.

Watch: Empowering Philippine startups through innovation & investment