OakNorth is the next-generation credit platform that is redefining lending to small and medium-sized businesses globally. Seen as Europe’s most valuable fintech with a $2.8 Billion valuation and one of the top five best funded fintechs globally according to Crunchbase, the platform allows traditional financial institutions to significantly improve and accelerate their credit decisioning and monitoring capabilities in the lower mid-market business segment ($0.5m-$25m loan size) by using data science and machine learning. Today, the platform is being licensed to a dozen banks globally.

We had a chat with Valentina Kristensen, Chief Strategy Officer of Oak North in preparation for her upcoming presentation at NOAH London.

 —  Early this year, OakNorth received $440m funding from Softbank’s Vision Fund. What are your 3 main goals as you continue to expand?

We have two goals  — to license the platform to more banks and lending institutions around the world and to continue leveraging the platform to grow our loan book in the UK.

 —  OakNorth has recently partnered with Smarterly and ShieldPay  — what is your further partnership strategy and how would you describe an ideal candidate? 

Every week we meet fintechs from across the UK (and now globally), so we’ll definitely be announcing more partnerships in due course. If a fintech has customers (individuals or businesses) who deposit with them but who aren’t currently earning any interest on those deposits, we’d love to speak to them.

For us, the key to a successful partnership is finding other players who are as passionate, fast-moving and customer-centric as we are. This has been central to the success for the Monzo, Moneybox and Smarterly partnerships and will be essential for future partnerships.

 —  The uncertainty of Brexit may lead to expansion hesitations from SMEs, your potential clients. How does OakNorth plan to overcome this challenge?

The first point to note is that we’re profitable (so we’re not burning through cash), have two revenue streams (licensing the platform and using the platform to do our own balance sheet lending in the UK), and have raised over $1bn, so are extremely well-capitalised and prepared to weather an economic storm in the future.

We also believe the best businesses thrive in times of economic turmoil and see opportunity where others may see a threat – e.g. property developers might be able to buy certain sites at a discount, other businesses may see their competitors go out of business which will give them a chance to gain market share or hire their best talent, etc. In the last two recessions, incumbent banks have pulled back / retrenched from SME lending. If this happens again, it would give OakNorth Bank an opportunity to potentially gain more market share.

The best businesses thrive in times of economic turmoil and see opportunities where others may see a threat. In the last two recessions, incumbent banks have pulled back / retrenched from SME lending. If this happens again, it would give OakNorth Bank an opportunity to potentially gain more market share.

 —  OakNorth has scaled very quickly under 3 years. What advice do you have for other startups who are expected to scale under a short period of time?

Don’t hire too quickly because you require someone in a seat as soon as possible. Take the time to find the best person for the role and someone who will raise the average of the entire team.

Too much money in the bank when starting out is a bad thing. When a company has too much capital available upfront, it tends to be built on fundamentally bloated cost structures.  Spending more money than is necessary becomes a part of the company’s DNA and changing this is hard. Having little to no money forces businesses to operate from a mentality of scarcity, and these businesses end up operating much more efficiently and profitably. 

Make your employees investors. One of the best decisions we’ve made at OakNorth is giving our team the opportunity to buy equity, rather than just giving it away in the form of bonuses. Our teams have invested circa £4m in the business.  When someone has skin in the game, it completely changes their mindset – they start to think like an owner of the business and are much more focused on the long-term.

 —  As you intend to go global, how do you plan to adapt your current strategies to new markets?

We’re not scaling by trying to become a global bank (i.e. applying for banking licenses in multiple markets). This would be incredibly time-consuming and expensive and is in our view, not the most effective way to scale our proposition.

Instead, we’re scaling by licensing our platform to other banks and lending institutions so that they can do lower mid-market lending more effectively in their market/s.

 —  Since it’s OakNorth’s first time joining NOAH, what are you most looking forward to this year and what do you hope to gain from the experience?

Meeting other fintechs and growing our contact base.

Book your ticket now to watch Oak North presentation live on 30 October at NOAH London 19 (see the details in our program).