Salmon’s Super–Charged Journey in AI-Enabled Consumer Lending

Salmon’s Super–Charged Journey in AI-Enabled Consumer Lending

by August 25, 2023

Manila-based fintech Salmon has grown rapidly in its first year of operations. From launching its first point-of-sale lending product four months after inception, rolling out its proprietary app, and securing partnerships with leading retailers across the Philippines – the fintech is steadily moving towards its goal of becoming Southeast Asia’s top credit-led neobank.

Salmon, headquartered in Manila, is quick and nimble thanks to its data-driven approach. Its proprietary credit engine enables Salmon to calculate risks and approve consumer loans quickly.

In addition to using facial recognition to help verify customer identity, Salmon plans to adopt other technologies made possible by the recent advancement of artificial intelligence (AI) across more aspects of its business.

The company has recently hired a new head of AI banking to lead a team dedicated to this workstream, that will tackle the task of building new and cutting edge products and functions.

This ranges from common functions such as facial recognition, which has already been fully built in-house, to more complex tasks including hyper-customising products for Salmon customers.

The Philippines is a market with huge potential for growth because it combines untapped demand for financial services, a young and growing population, positive GDP growth, together with a government that is keen to support digital players.

Last year, the country’s Department of Trade and Industry launched a national AI roadmap that seeks to transform the nation into a Southeast Asian AI powerhouse, and utilise the technology to enhance collaboration between local and global players.

It was therefore a natural step for Salmon to begin its journey in Manila.

Staggering untapped demand

Source: Unsplash

There are currently only about 6 million unique credit card users across a population of 114 million people in the Philippines and this has not changed much in the past 15 years.

In addition to the country’s young and digitally savvy population (>50% aged 24 or younger), the economy is growing at its fastest pace in decades, spurring demand for consumer loans.

Salmon has recently secured a US$20 million debt facility, a record amount for a series A company in the Philippines, and plans to expand its loan book and launch new products in the coming months.

The company made its start by launching point-of-sale (in-store) agent-assisted lending in the Philippines in November 2022.

Salmon saw this as a crucial first step on the road to building customer trust, by onboarding customers in a physical retail setting, as well as growing its credit portfolio to help calibrate its AI-enabled credit engine and gain knowledge that could be carried over to other channels, segments and services.

After receiving positive feedback, Salmon complemented its point-of-sale loans with the launch of online cash loans, making them available to its customers who have established great credit behaviors.

Raffy Montemayor

Raffy Montemayor

“The results we are already seeing in terms of conversion rates and credit risks are very encouraging.


We are also preparing to launch a market-disrupting credit product, aimed at helping the underserved and the underbanked take back control of their financial lives by providing them with tools to improve their financial well-being,’’

said Raffy Montemayor, Co-founder and Business Head in the Philippines at Salmon.

These consumer lending products can be managed via the Salmon app, which has a 4.8-4.9 rating from customers in the App Store and Google Play, surpassing the ratings of the Philippine legacy banks’ mobile apps by a huge margin.

Data-centric approach

Source: Freepik

Operating in a country where most of the population still lack any formal credit history, Salmon has placed a heavy focus on data, and adopted a rigorous “test and learn” approach to determine a customer’s creditworthiness.

Salmon achieves this by leveraging AI to analyse a simple client questionnaire, alongside customers’ digital footprints and data from alternative third-party sources, including telecoms providers, to gain access to more than 100 data points on which to base a credit decision. The company expects to hone this approach further as it grows its customer base.

To help verify customers’ identities – another challenge in a country where more than 26 types of ID are used – Salmon has also integrated AI-based facial recognition technology into its processes, which in addition to physical KYC at retail points and the use of multi-source data, to help lower the risk of fraud.

The fintech industry is among the largest adopters of AI technology worldwide, accounting for the third largest share in AI investment in 2022 at US$ 5.5 billion, according to a report by the Stanford Institute for Human-Centered Artificial Intelligence, while McKinsey estimates that AI technologies could potentially deliver up to US$1 trillion of additional value to the global banking sector annually.

Salmon sees a tech-driven approach, including the use of AI, as part of the solution for expanding financial inclusion in the Philippines.

Creating a thriving ecosystem

Source: Freepik

There is strength in numbers, and given the blue ocean of opportunity that defines the Philippines, Salmon sees lots of room for cooperation to create a thriving tech-enabled ecosystem that benefits everyone.

“All fintechs in Southeast Asia probably make up less than 1.0% of all issued credit in the economy. Traditional banks account for the 99%.


Those banks have a legacy of poor customer service and a closed-loop system that is impenetrable for a large share of the population – all of which we are trying to disrupt,”

Montemayor said.

A recent study by BCG estimates that fintechs, on aggregate have an opportunity to gain one fourth of the traditional global market cap by the end of this decade by offering a better quality of service, products, and use of data as well as a more customer-centric culture.

In a nutshell, this is Salmon’s approach as well. The fintech is focused on leveraging tech innovation to provide transparent and easy-to-understand financial products that will help underbanked Filipinos reach their personal goals.

As it looks forward to launching new products in the coming months, Salmon is also embarking on its Series B fundraising and is looking for investors to help unlock new opportunities and share in Salmon’s success.

“We are very excited for Salmon to be at the forefront of creating these important changes and being well-positioned to deliver tremendous value in the region,”

Montemayor concluded.