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Banking Tech Awards
4th December 2024
Royal Lancaster Hotel

Banking Tech Awards 2023 Finalist: Salmon

Salmon, has been selected as a finalist in the FinTech Start-up of the Year category in the Banking Tech Awards 2023.

Salmon

Salmon, founded in July 2022, is on a mission to disrupt the financial services industry in Southeast Asia. Salmon is building the region’s best neobank with a view to unlocking access to credit for more than 500 million people. Southeast Asia is a major growth area as the APAC region is currently on track to increase eightfold in size, overtaking the United States as the largest fintech market in the world by 2030.

Founded by an experienced team of fintech experts, many of whom have decades of experience working at Tinkoff, one of the world’s premier digital banks, Salmon launched its first product in the Philippines within just four months of its inception. To date, the company has assembled an impressive team of over 150 professionals from more than 16 countries.

Salmon’s multinational leadership team and its three founders have extensive experience working in startups, fintech companies, and established banks. 

Backed by prominent investors including ADQ, Abu Dhabi's sovereign wealth fund, Salmon raised a heavily oversubscribed $16 million Series A round in 2022, as well as a more recent, record-breaking $20 million debt financing from Argentem Creek Partners. The latter represented the largest debt financing ever raised by a Series A tech company in the Philippines.

About Salmon

Salmon’s mission is to bring AI-enabled modern banking services to more than 500 million underbanked consumers across Southeast Asia, starting with the Philippines.

The Philippines is one of the world’s “blue oceans” for consumer finance. The country has historically had the lowest consumer lending to GDP ratio in the whole of Southeast Asia, and is home to just 6 million unique credit card holders out of a population of 115 million people.

While lending is scarce, demand for loans and other financial products continues to rise. GDP growth is forecast to average 6 percent per year over the medium-term in the Philippines, as the country is expected to become a trillion dollar economy by 2033.

The Philippines has one of the world’s youngest (with a median age of 24) and mobile-native populations, often being referred to as the “social media capital of the world”. The bankable population is also set to spike 30 percent and reach 85 million by 2030, up from 65 million in 2022, fueling demand for financial products and services, according to recent research by McKinsey & Company.

As it stands, traditional banks have failed to keep up with this demand due to a closed loop local banking system that results in services being available to only a select few, while alternative means of accessing credit (for example, pawn shops and payday loans) have come at prohibitively high yields for the local population.

Salmon is using AI and technology to eliminate these inefficiencies as it works to bridge the financial inclusion gap and bring consumer credit and hassle-free daily banking to everyday Filipinos, helping them to improve their lives, start businesses and gain easier access to the formal economy.

DATA-CENTRIC BUSINESS

Salmon’s approach to lending is powered by its data-centric credit engine, which leverages a full tapestry of available data about individual consumers to make reliable credit decisions. This enables Salmon to make credit decisions in under 30 seconds, despite the fact that the Philippines is a country where many people still lack established credit histories.

In addition to employing offline KYC, Salmon leverages its proprietary customer information and alternative data sources (such as from telecom providers) to aggregate hundreds of data points that are used to evaluate customer credit risk and ensure fast and responsible lending decisions.

This ‘credit engine’ is the company’s secret sauce and is based on the team’s deep expertise in technology and banking, as well as knowledge of the needs of local customers gained from living and working on the ground in the Philippines.

The company plans to expand and hone this approach further as it grows, supported by the network effect that will come from further growth of its customer base.

The company has also developed proprietary integrated facial recognition technology to help verify customers’ identity and minimize fraud, successfully overcoming the added challenges associated with operating in a country where there are a wide range of available IDs.

This tech- and data-centric approach gives Salmon a significant edge on local legacy banks, whose applications are characterised by a branch-centric mindset, arduous paperwork and lengthy approval processes, and has enabled them to achieve nationwide retail coverage in the consumer lending space within just a few months of launch.

Salmon’s fast-growing list of major local retailers includes Vans, Home Along, and SM Store, the largest retail network in the Philippines.

CREDIT PRODUCTS & PROPRIETARY APP

Salmon’s first product was point-of-sale (in-store) agent-assisted lending. This was a crucial step for the company as it allowed them to quickly onboard customers in a physical retail setting, using its growing credit portfolio to calibrate Salmon’s credit engine and gain valuable knowledge to apply across other channels, segments and services. The company’s in-store presence also made it easier to spot and stop potential fraud than it would have been if the company had purely relied on online acquisition channels when launching its initial lending products.

The fintech later complemented its point-of-sale loans with cash loans, which it now cross-sells to its top customers. The initial results of this new product have already been encouraging in terms of conversion rates and risk management.

Customers can manage their borrowings via the proprietary Salmon app, which launched in April and enables customers to keep track of their finances and settle any outstanding balances from their smartphone. The app makes payments simple and accessible to local customers by supporting payments made through GCash and Maya e-wallets, as well as at 7-Eleven and Cebuana Lhuillier branches nationwide.

To ensure a smooth and enjoyable user experience, Salmon integrated AI solutions and made the active decision to exclude in-app pop-up banners or advertisements – a common feature in other Filipino apps. Salmon also ensured that its download size remained small, taking up no more storage than was necessary to give customers instant access to the information they need.

As a result, the Salmon app is optimised to perform efficiently on even the simplest devices and stands out from other apps released in Asia for its rapid download speeds, slick UX and intuitive design. Salmon’s development of the app is ongoing - the company refines and improves the user experience based on feedback data and will add additional functionality in the future.

The Salmon app currently has a 4.8 - 4.9 rating in the App Store, Google Play Store and Huawei App Gallery, far surpassing the ratings of mobile apps produced by Philippine legacy banks, many of which rank well below 2.0. This is a great endorsement of the progress made by Salmon in its mission to make financial products simple, transparent and easy to use, and is further backed up by a recent company survey, which shows that 92% of Salmon customers would recommend the company’s products to friends and family.

The same survey also highlighted that Salmon financing represented the first-ever loan for 76% of Salmon customers, further underscoring the fintech’s effectiveness in broadening local financial inclusion. The company is now present on seven of the Philippine’s largest islands, with plans to expand to further islands in the near future.

LIGHTNING SPEED

Salmon launched its first credit product just four months after its inception and has averaged a new product every four months since then - in total launching three products across three different channels within just 12 months, while managing down risks and expanding its footprint to all major islands in the country. Salmon has been able to move at lightning speed thanks to the depth and experience of its team, who bring decades of experience in successfully launching and scaling startups and fintech companies across different emerging markets. The success of its products has also been supported by the company’s “test and learn” approach, which involves testing the market fit of its offering and approach and then rapidly adapting it to suit customers’ needs.

In just over 1 year, Salmon has already become a viable challenger to longer-established players, with a loan book that is rapidly approaching parity in size with key peers as the company rapidly advances towards its vision of building the best credit-led modern bank in the country.

REVENUE MODEL

Salmon understands the importance of focusing on business fundamentals, namely unit economics and the path to profitability, from the outset.  Within 12 months of market launch, Salmon achieved positive unit economics on all of its products. Members of the Salmon team have successfully implemented this blueprint to create world-leading fintechs in other emerging markets.

The company is focused on achieving sustainable growth - driven initially by consumer lending (point-of-sale loans) to build a robust revenue-generating engine, before eventually adding additional products such as deposits, payments and other types of lending, to leverage cross-selling opportunities and become a full-scale neo bank.

Salmon sees enormous potential in unlocking the lifetime value of its customers by cross-selling superior products and providing them with a best-in-class, technology-enabled customer experience.

FUTURE PLANS

Salmon has already advanced quickly and aims to maintain this strong momentum going forward. It plans to expand partnerships with local retailers to bring Salmon’s products to more people, as well as work together with regulators and other industry players to achieve their ambitious goal of expanding financial inclusion by making financial services simpler, more intuitive and more accessible.

As Salmon expands, it also remains committed to helping the local fintech scene flourish by hiring and developing local fintech talent and reinvesting PHP 10 million into the local tech ecosystem. In five years’ time, Salmon aims to be well on its way to becoming a leading credit-led bank in Southeast Asia, with a presence in 2-3 new markets.