Tonik Digital Bank, or simply Tonik, is tapping Google Cloud’s advanced platform to accelerate financial inclusion for all Filipinos. Leveraging Google Cloud’s expertise in scalable infrastructure, application programming interface (API) management, machine learning (ML) and data analytics, the bank has taken just 10 months to become an established leader in open banking innovation and delivering next-generation financial services.
Tonik, which is part of Singapore-headquartered fintech firm Tonik Financial Pte. Ltd., was launched in March 2021 after obtaining an initial rural bank license from the Bangko Sentral ng Pilipinas (BSP). Its digital platform provides core services like deposits with interest rates of up to six percent per annum. There are also unique features for customers to create separate pockets of savings to meet specific goals over time called “Stashes,” such as affording a vacation, a college education, or accumulating an emergency fund.
“Fewer overheads from being branchless allows us to offer industry-leading interest rates that enhance Filipinos’ financial wellness, but our value proposition cannot be solely driven by lower costs. We have had to first earn the trust of consumers by investing heavily in a superior customer experience,” said Greg Krasnov, Founder and CEO, Tonik. “Google Cloud has enabled us to deliver frictionless and customer-centric services that allow Filipinos to easily embrace the financial system. This collaboration – having played an integral role in Tonik being entrusted with more than US$100 million in consumer deposits to date – will empower us to continue expanding our product portfolio and drive real societal impact across the region.”
Secure APIs Open Up New Possibilities for Consumers and Developers
With the BSP requiring banks to conduct due diligence by verifying each customer’s identity to prevent fraud and money laundering, applying for an account traditionally involves individuals having to first visit a physical branch to present valid government-issued identification (ID) to an officer. This makes it difficult for millions of Filipinos to open accounts or make deposits. Unlike urban cities that have bank branches or ATMs at every corner, the people in rural Philippines – who account for 52.6 percent of the total population – must travel long distances and arrive before the branch closes.
By using Google Cloud’s Apigee API Management platform to build and scale open banking APIs, Tonik could quickly integrate its mobile application with capabilities from third-party providers to make account opening and cash deposits fast, seamless and convenient.
To help Filipinos set up accounts in under five minutes – instead of hours or days, Tonik interoperates with Daon, its partner for automated customer onboarding and biometric authentication. The process starts with Tonik asking the customer for a selfie and a scanned copy of their ID. Tonik extracts text from these images through Google Cloud’s optical character recognition (OCR) APIs and shares the information with Daon through another trusted API. Daon then cross-checks the customer’s identity against official sources that issued the ID. This complex data flow is invisible to the user, who only needs to download the Tonik mobile application, verify their identity for account opening, and start banking.
Using APIs, Tonik also exchanges data securely with authorized ecosystem partners like 7-Eleven convenience stores and pawn shops to capture transactions in real-time. When a user makes a deposit at a 7-Eleven, which are readily available across the Philippines, they would see the completed transaction on their Tonik application and start earning interest immediately.
“Interoperability is core to our business strategy and everything on our digital banking application is therefore API-driven,” said Arivuvel Ramu, Chief Technology Officer, Tonik. “As our architectural foundation, Google Cloud’s industry-leading Apigee API Management platform allows us to unlock new digital channels, expand our business model, and generate new revenue streams. While APIs are not new to conventional banks, they tend to be private APIs tailored for a specific partner, which means third parties cannot reuse that API. In line with our commitment toward supporting broader ecosystem innovation, we have taken the private APIs that we have developed and converted them into public APIs.”
Third-party developers who want to create new features or services for Tonik’s ecosystem of partners and users can now reuse its public APIs to do so expeditiously. Apigee also provides a sandbox environment for developers to test and refine what they have created. Issues that would cause downtime can then be identified and rectified before the feature or service is authorized and rolled out to its intended users.
“Customers trust us with sensitive information like demographic and transaction data. As a custodian of data and a facilitator of open banking innovation, it is imperative that we uphold the highest standards of consent management and API security. By capturing and managing customer consent on what data we are permitted to share with authorized third parties, Apigee ensures that we comply with stringent regulatory requirements like PSD2. Apigee simultaneously secures our APIs to avoid data breaches by malicious users,” said Ramu.
Pooling Insights to Deliver Financial Wellness and Hyper Personalized Customer Experiences
Tonik currently serves more than 190,000 customers. To further advance financial inclusion and achieve its target of growing its active customer base to a million users by December 2022, the bank has built an intelligent data lake using Cloud Storage on Google Cloud and BigQuery to provide hyper personalized customer experiences and help many Filipinos access loans for the first time.
With data generated from every event along the customer journey and residing across systems, connecting datasets and analyzing them manually is an uphill task. A cloud-based contact center software, for example, captures customer interactions and feedback across channels, while a core banking system captures deposits and withdrawals.
By unifying data across systems and applying machine learning, Tonik can, for instance, implement quick and accurate alternative credit scoring methods. This enables it to serve individuals who have not formally engaged with financial institutions in the past, have no credit histories, and do not qualify for traditional bank loans as a result. Tonik has recently pioneered a consumer lending product called “Quick Loan” without the need for credit histories or collateral, followed by approvals within 30 minutes and real-time disbursement.
“To drive financial inclusion and transcend physical distance, pivoting to digital-first business models and customer interactions are now a necessity,” said Ruma Balasubramanian, Managing Director, Southeast Asia, Google Cloud. “Tonik, through its mature API- and data-led strategy, is creating an open finance ecosystem that will accrue richer digital user experiences and flexibility for players to securely share and maximize digital assets – with Filipinos the ultimate beneficiaries. Google Cloud is proud to be a part of Tonik’s innovation journey. We look forward to supporting the bank’s continuous commitment toward serving the Philippines’ unbanked and underbanked, while it scales for growth and empowers the region’s fintech developer community.”