The financial landscape in the Philippines is a mixed bag. The country has a low banking penetration rate among peer countries, yet the majority of bankable Filipino customers (60%) are gravitating toward banking players that are digitally oriented.
With its bankable population projected to rise from 65 million in 2022 to 85 million by 2030, Salmon, a financial services company led by CEO George Chesakov, is carving a unique path by catering to millions of Filipinos who find themselves caught on either side of this divide.
The Salmon story
Chesakov has been actively engaged in startup endeavors over the past two decades, with a strong focus on consumer banking, fintech, and telecommunications. One notable experience that he was a part of involved the digital bank Tinkoff.
After joining Tinkoff in 2006, Chesakov played a pivotal role in the bank’s growth as it embarked on international expansion. His responsibilities included spearheading a greenfield project in the Philippines, with the goal of securing a digital banking license. However, progress was derailed by the outbreak of the Russia-Ukraine war. At that time, Chesakov was already based in Manila, thus he made the decision to continue exploring the industry.
“The decision to focus on the Philippines remained unchanged because it’s a large, rapidly growing country with over 110 million people, offering significant potential for financial services development. The country’s GDP growth projections are promising, and there is a substantial need for improved financial services [to address] a significant financial inclusion challenge,” Chesakov said. Together with Pavel Fedorov, the former co-CEO of Tinkoff, and Raffy Montemayor, who hails from the Philippines, they collectively established Salmon.
The company has ambitious plans to obtain a banking license, though it involves a complex and time-consuming process. While pursuing this goal, Salmon recognized the need to understand how lending works in the country and best position the company once all requisite licenses have been obtained.
To expedite this progress, Salmon obtained a license for offline lending. This decision was made due to the unavailability of online lending platform licenses at the time, owing to a moratorium issued by the Securities and Exchange Commission (SEC) in the Philippines, in response to consumer complaints about the proliferation of companies engaged in exploitative and predatory lending practices.
Salmon’s decision to offer point-of-sale lending transcends from its advantages in risk management gained from direct customer interactions. Recognizing the potential to serve Filipino consumers who depend on daily income and may have limited financial expertise, Salmon decided to offer in-store financing before subsequently expanding its services.
Providing a unique customer journey
Salmon employs a proprietary scoring algorithm which leverages a variety of data sources—including FinScore’s alternative credit scores—to make an informed credit decision. This process is typically completed in under ten minutes. Upon approval, customers can make a downpayment at the cash register, equivalent to 10–15% of the total charges, via cash, credit, or online payments such as debit and GCash. The remaining charges are repaid later in installments spanning 4–12 months. These are facilitated using Salmon’s mobile app, which enables users to repay using GCash and other online payment methods. Alternatively, barcodes can be generated for users to make in-person payments at designated locations such as 7-Eleven outlets.
Chesakov explained that Salmon’s approach may differ from other buy now, pay later providers in the Philippines. While some providers adjust credit limits based on repayment history and primarily offer services in convenience stores, food outlets, or clothing, Salmon concentrates on providing its services in retail stores that offer high-value, lower-margin goods such as washing machines and other household essentials. This ensures that Salmon users are primarily utilizing Salmon’s BNPL service to support their purchase of essential goods.
Ensuring timely payments from customers remains the greatest hurdle for lenders. Salmon’s approach emphasizes proactive outreach and timely reminders, ensuring customers remain informed about their impending payments. Customers without smartphones are also offered assistance in locating their offline partners where in-person payments can be made.
“The reality in the Philippines is that income levels often fluctuate, and economic stability varies. It’s a developing economy with changing job markets, so our approach is rooted in empathy and assistance rather than aggressive tactics. We encourage customers facing difficulties to communicate with us so that we can work together to find a mutually beneficial solution, whether it’s adjusting payment schedules or providing temporary relief during challenging times,” Chesakov said.
Salmon’s immediate priority is establishing a strong presence in the country and gaining more experience in the Philippines market. Over the next decade, as more Filipino consumers reach working age, Salmon sees tremendous opportunities for growth by expanding its offerings.
“Our mission is to make financial services user-friendly, removing the barriers that deter people from utilizing the full potential of these services. It’s not [always the case] that people don’t understand financial services—it’s often their fear of not understanding. We approach this with humility and aim to build partnerships rather than adopt a condescending attitude,” Chesakov said.