OakNorth, a UK fintech that specialises in providing loans to small businesses, is eyeing global expansion and more customers for its underlying technology platform, having recently raised an eye-popping funding round of $440 million (£343 million) from SoftBank's Vision Fund and Clermont Group.

The challenger bank's cofounder, Joel Perlman, talked at Finovate Europe in London yesterday about how the company is planning for ambitious growth after the injection of cash.


The story behind OakNorth involved Perlman and his cofounder Rishi Khosla as they struggled to get bank loans to build and grow their first venture, Copal Amba, which they sold to Moody's in 2014.

"We couldn't raise debt in the UK even with a good business with good contracts. We went to HSBC and other banks and the best offer we could get was £100,000 fully guaranteed against Rishi's house. We then went to New York and got $10 million unsecured. So we saw an opportunity in the market," he told the audience.

To date, OakNorth has lent more than £2.9 billion to small businesses, with no defaults to date.

So what next for a bank which is already profitable and growing at a steady rate? Well, flush with $440 million from the same ambitious fund that has massive holdings in Uber, WeWork and chip designer Arm, Perlman has his eye on "more balance sheet lending to customers and to build more technology," in short.

On the technology side, Perlman has ambitious plans to reduce the amount of time it takes customers to get credit to three days after the initial meeting, down from around two weeks at present, which is months quicker than a high street lender. 

Then there are plans to expand globally. OakNorth recently opened offices in New York and Singapore and Perlman has his eyes on a global market for its lending services and underlying platform, with North America the first in the crosshairs. "We want to be the global utility for SME lending and we are just getting started," he added.

"It's our second time around. Rishi and I are giving ourselves 20 years to do this and solve a problem. Branch managers lost the authority to lend 30 years ago, which created a huge problem for community entrepreneurs reliant on that branch manager knowing them personally. Our goal is to reinvigorate the growth entrepreneur globally," he said.

The OakNorth Analytical Intelligence platform is also a huge opportunity for the company. This decisioning system is what allows OakNorth to provide loans way faster than traditional lenders and it can be white labelled for other banks.

That platform uses machine learning techniques to run faster credit analysis than high street banks, while also proactively monitoring the portfolio to spot early warning signals, allowing them to intervene months before covenant breaches and defaults occur. Currently it has 12 customers, Perlman said, so there is room to grow there.

"That would put us in a strong position as a bank and a platform for other banks," he said.