Philippines’ Digital Bank Bets on AI for Unsecured Lending

The Banker | 15 November 2024

Tonik is looking to use artificial intelligence to assess creditworthiness of potential $100bn riskier loans

The Philippines offers “huge potential” for digital banks serving the country’s credit needs, according to the chief technology officer of one of its digital banks.

“We started off wanting to target the underbanked in the Philippines and we realised that the majority of customers in the [country] don’t have the opportunity to take out a loan easily through a formal channel,” says Tonik’s CTO, Sateesh Reddy.

While traditional banks typically lend to customers that can offer collateral, Tonik is positioning itself as the unsecured lender for the majority of the country’s population. “It’s a mass market we’re talking about, with a huge potential,” he adds.

Tonik estimates that there is an opportunity worth roughly $100bn of unsecured consumer lending. 

The share of Filipinos with a bank account jumped from less than 30 per cent in 2019 to more than 56 per cent in 2021, according to the country’s central bank Bangko Sentral ng Pilipinas. More recent estimates put that figure at more than 60 per cent.

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