Latest news with #OakNorth
FF News
14-05-2025
- Business
- FF News
EXCLUSIVE: "Fertile Ground" - Hugo Oliveira Sousa, OakNorth in 'The Fintech Magazine'
British neobank OakNorth has definitively planted itself in American soil with the acquisition of a community bank. So what will businesses there make of it? It may have been serendipity that OakNorth's first acquisition in the US is based in Oakland County, Michigan. But it's not just the name that should make the British neobank feel at home. Built on the back of manufacturing and tech, Michigan is a state that's proudly pro-business, with hundreds of thousands of small enterprises that fit snugly into niche lender OakNorth's target demographic of the equivalent £1million to £100million turnover. The Community Unity Bank (CUB) acquisition, which is subject to approval, is a crucial stage in OakNorth's plan to expand across the States, having first exported its business lending model there in July 2023. Since then, it has lent more than $700million stateside, including to UK businesses in the US such as nursery brand Mamas & Papas. In fact, OakNorth chief executive Rishi Khosla recently said demand from US borrowers had exceeded expectations, the bank lending three times more than anticipated. In CUB, OakNorth found a kindred spirit. Both organisations were built by entrepreneurs for entrepreneurs and they both set out to address a gap in the provision of small business credit in their respective markets. Now, as trade tariffs threaten between the UK and the US, OakNorth finds itself uniquely placed to assess the risks and opportunities for both business communities. Launched in 2015, OakNorth has never deviated from its target customers – growth-driven, lower-mid market businesses with a proven model and aspirations to grow. Hugo Oliveira Sousa, who arrived to set up the bank's marketing operation in 2021, says: 'Until then, OakNorth didn't have a marketing team, the business was profitable from day one and was built on referrals, which is quite a feat. It is a brand built on a niche, which is businesses that are routinely underserved in terms of their growth needs. Our differentiator from other banks is that 'No one wants to pick up a phone if they don't have to. But, if you want to make a £1million transfer to buy your next business or plot of land, and a computer says no, a chatbot can't help. You need a human who knows your business.' Sousa says OakNorth's goal has always been profitable growth. That means it has resisted the urge to move mass market, which risks onboarding unprofitable customers or such a wide range of them that the bank's customer support model becomes overloaded. So far, that's proved the right course. OakNorth's annual report for 2024 reported a pre-tax profit of £214.8million, up 14 per cent on the previous year. Loans and advances to customers rose 15 per cent to £4.42billion last year. Last summer, the bank launched its business current account to build stronger relationships with those customers. And, as senior director, Sousa now co-leads the banking team. Since a business account is a 'commodity', he says, the platform is provided by cloud banking fintech Thought Machine, but the offer is tailored by OakNorth to meet its niche market's needs. 'If you want to make a transfer of £1million to buy your next business and the computer says 'no', a chat bot can't help. You need a human' 'When we began work on the business product we knew 60 per cent of our customers on the lending side were recurrent customers, but that's event-driven, we didn't keep a consistent relationship,' he says. 'We had customers asking us for a business account that was as seamless as their loans, so we realised it was something we could do. But there's no point in acquiring thousands of business customers if you can't monetise and support them with a product they are willing to pay for. We say clearly, we're not competing on price. We compete on premium service to meet specific needs.' An example of those needs could be a customer who has to open a bank account fast for a special vehicle it has created for an acquisition – that would typically result in rejection from a neobank and a waiting time of months with an incumbent. 'We can do it quickly because we understand complex company structures,' says Sousa. 'Solving specific needs for specific problems that a business has is proving to be 10 times more valuable than having people open accounts en masse.' As OakNorth is laser-focussed on the challenges it seeks to solve, Sousa says features such as the business account's AML provision and payment cards are delivered by proven third parties. 'Our app, our front office, our experience, all that is done in-house,' he adds. 'But for cards, for example, why spend millions developing that technology when it's already there and you can plug and play? Our data platform is proprietary, so we develop that. It's connecting our systems and that's an important point. 'If you go to one of the incumbents and ask for a business loan, it's a completely different unit to when you go to open a business account. All these systems are disconnected. But a customer is a customer – a business owner may have six different businesses and is probably saving with us at a personal level. So having a unified view is important for our experience and it's something that we want to control.' OakNorth will be hopeful its niche focus will win favour with the US's small to medium-sized businesses, while being protected from defaults by its commitment to building holistic customer data – something that CUB will give it a headstart on in Michigan. After all, community banks have a long tradition of knowing their local users well in a vast country. According to umbrella group, the Independent Community Bankers of America, they provide 60 per cent of small business loans under $1million and 80 per cent of banking industry agriculture loans. And that strong local focus, designed to create and maintain wealth within the areas they serve, is traditionally built on local knowledge and community activism. Community Unity Bank was created in 2023 as a reaction to a decline in local banks and industry consolidation, plus a perceived lack of personal service and empathy during the economic crisis of 2008 and the COVID pandemic. With parallels to OakNorth, it brought together entrepreneurs from around Oakland County to meet a need for small business lending and aims to be 'client-centric and service driven' while 'deploying state-ofthe- art technology that is easy to use'. Its team has worked hard to establish relationships with businesses in the south east of Michigan while providing loans for business expansions and bank accounts to both businesses and individuals. A recent survey by McKinsey of 1,200 American SMEs found their most important criteria when selecting a primary bank was robust relationship management followed by the availability of online and mobile tools. With a commitment to offering both of those, the combined OakNorth and CUB teams promise to be a powerful force in a state that is all about expansion. As Henry Ford, one of Michigan's most famous entrepreneurs, said: ''If everyone is moving forward together, then success takes care of itself.' This article was published in The Fintech Magazine Issue 34, Page 51-52
Finextra
07-05-2025
- Business
- Finextra
OakNorth to embed GPT tools from OpenAI across its business
OakNorth, the UK digital bank for SMEs, has signed a deal with OpenAI to embed generative AI technologies across its business. 1 OakNorth is already deploying AI across horizontal and vertical initiatives - from digital lending to functional-led AI enhancement projects, as well as firmwide AI adoption. Under the collaboration with OpenAI, the bank says it will deliver faster and more bespoke experiences for customers, with custom-built GPT tools enhancing everything from deal structuring and term drafting to real-time query handling. Rishi Khosla, co-founder and CEO at OakNorth, says: 'Through this collaboration with OpenAI, we'll be able to deliver even greater personalisation and speed for our customers, as well as enhancing our operational efficiency. By embedding AI across every layer of our business, we're building a smarter, leaner, and more impactful bank - one that delivers even better outcomes for entrepreneurs and is able to stay ahead of the curve.'
Yahoo
09-04-2025
- Business
- Yahoo
OakNorth extends £16m loan to Inuvi Medical Services
UK-based digital bank OakNorth has extended a £16m ($20.4m) financing facility to Inuvi Medical Services (Inuvi). The capital will be used by the diagnostic services provider to refinance existing bank debt and support future acquisitions, including that of Physiological Measurements, known for its community non-invasive diagnostic services in partnership with the NHS. Set up in 2015, Inuvi has evolved into a diversified health services company. It offers a broad range of services, including health assessments, phlebotomy, laboratory testing, and community diagnostic services. Inuvi caters to various sectors, including NHS, professional sports, consumer health, and insurance markets. OakNorth said Inuvi operates one of the UK's largest independent pathology laboratories in Gloucester, supported by a national network of more than 750 healthcare professionals. The company provides mobile and clinic-based diagnostic services from five locations: Wokingham, Gloucester, Plymouth, Oswestry, and London. OakNorth Bank's director of debt finance Stewart Haworth said: 'Inuvi is a fantastic example of a fast-growing, innovative business delivering critical healthcare services. Driven by expansion in lab testing capacity and strategic acquisitions, it's had nine years of uninterrupted revenue and profit growth, enabling it to secure the backing of an excellent sponsor, Longacre, in 2019. 'With an experienced management team, strong financial performance, and a scalable business model, Inuvi is well-positioned for long-term success. We are delighted to support their expansion and look forward to seeing their continued impact in the healthcare sector.' Inuvi Medical Services CEO Jonathan Benton said: 'OakNorth's deep understanding of our sector and flexible financing approach make them an ideal partner for us. This funding allows Inuvi to accelerate our growth strategy, expand our diagnostics capabilities, and better serve our NHS and corporate clients through the acquisition of Physiological Measurements.' Inuvi has made several acquisitions in recent years, including Express Diagnostics and Medicals Direct in 2023. This £16m deal is OakNorth's second transaction with Inuvi's private equity sponsor, Longacre Group, following the financing of Veracity UK in December 2024. OakNorth is also a part of the SME Finance Taskforce, which includes leading banks, alternative lenders, and fintechs. In August 2024, the coalition released an action plan to revitalise the UK economy, aiming to expedite lending for the country's 5.5 million SMEs, crucial to the economy by employing 60% of the private-sector workforce and generating over 50% of economic turnover. "OakNorth extends £16m loan to Inuvi Medical Services" was originally created and published by Leasing Life, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
Yahoo
16-03-2025
- Business
- Yahoo
Digital lender OakNorth to be parent of US bank CUB
OakNorth, the British-based digital bank, will this week unveil a milestone US deal that will pave the way for it to launch a significant expansion on the other side of the Atlantic. Sky News has learnt that OakNorth, which is chaired by the former City watchdog chair Lord Turner, will on Monday announce that it has agreed to acquire Community Unity Bank (CUB), which is based in Birmingham, Michigan, in an all-share deal. The purchase price was unclear on Sunday, although one insider said it was likely to be valued in the tens of millions of dollars. OakNorth declined to comment. Launched in 2015, the bank is among a group of lenders - along with Monzo and Starling Bank - founded after the 2008 financial crisis. Its backers include the giant Japanese investor SoftBank and GIC, the Singaporean state fund. Since its launch, it has lent close to £12.5bn and boasts an industry-leading loan default ratio. Last year, it paid out just over £30m to shareholders in its maiden dividend payment. OakNorth has been growing rapidly, and this month said it had recorded pre-tax profits of £214.8m in 2024, up from £187.3m the previous year. It made more than £2.1bn of new loans last year. The acquisition of CUB, which launched just three years ago, is subject to regulatory approval, but follows authorisation of OakNorth by the Federal Reserve and the New York State Department of Financial Services for a Representative Office in New York last year. OakNorth began lending in the US in 2023 and has since made $700m of loans, including to F1 Arcade and Ultimate Performance.
Sky News
16-03-2025
- Business
- Sky News
Digital lender OakNorth to be parent of US bank CUB
OakNorth, the British-based digital bank, will this week unveil a milestone US deal that will pave the way for it to launch a significant expansion on the other side of the Atlantic. Sky News has learnt that OakNorth, which is chaired by the former City watchdog chair Lord Turner, will on Monday announce that it has agreed to acquire Community Unity Bank (CUB), which is based in Birmingham, Michigan, in an all-share deal. The purchase price was unclear on Sunday, although one insider said it was likely to be valued in the tens of millions of dollars. OakNorth declined to comment. Launched in 2015, the bank is among a group of lenders - along with Monzo and Starling Bank - founded after the 2008 financial crisis. Its backers include the giant Japanese investor SoftBank and GIC, the Singaporean state fund. Since its launch, it has lent close to £12.5bn and boasts an industry-leading loan default ratio. Last year, it paid out just over £30m to shareholders in its maiden dividend payment. OakNorth has been growing rapidly, and this month said it had recorded pre-tax profits of £214.8m in 2024, up from £187.3m the previous year. It made more than £2.1bn of new loans last year. The acquisition of CUB, which launched just three years ago, is subject to regulatory approval, but follows authorisation of OakNorth by the Federal Reserve and the New York State Department of Financial Services for a Representative Office in New York last year. OakNorth began lending in the US in 2023 and has since made $700m of loans, including to F1 Arcade and Ultimate Performance.
