Salmon: the sudden rise of a consumer finance challenger in the Philippines

Raffy Montemayor is Salmon’s Co-Founder and Business Head in the Philippines. He tells us more about the company, its offer and its long-term ambition to become a fully licensed bank.

What is the situation and what are the trends in consumer credit in the Philippines? And how are local banks handling it?

The Philippines is a blue ocean when it comes to consumer finance. The country has historically had the lowest GDP to lending ratio in the whole of Southeast Asia, and is home to just 6 million unique credit card holders out of a population of over 110 million people. The market is therefore hugely untapped, with conservative forecasts estimating the small lending market will at least double by 2028.

While lending is scarce, demand for loans and other financial products is continuing to rise. GDP growth is forecast to average 6-7% per year over the medium term in the Philippines, with GDP per capita growing about 55% within the next eight years. And the population is set to spike by 30% to 85 million by 2030 from 65 million in 2022, fueling demand for financial products and services, according to a recent research report by McKinsey & Company.

Traditional banks have failed to keep up with demand due to the closed loop system that results in services being available to a select few, while alternative means of accessing credit have come at prohibitively high yields for the local population. There is enormous potential for fintechs to revolutionize these inefficiencies, and at Salmon we aim to drive this change as we realize our mission to expand financial inclusion by making finance simpler, more intuitive and more accessible to more people.