Interview with Rishi Khosla, co-founder of OakNorth Bank

  • OakNorth Bank is a UK bank for small and medium sized companies that provides business and property loans.
  • OakNorth was founded by Rishi Khosla and Joel Perlman after gaining regulatory approval in early 2015.
  • OakNorth Bank’s Annual Report for 2019, revealed a “pre-tax profit jump of 95% to £65.9m, up from £33.9m in 2018.”


Who are OakNorth and what is the company ethos?


Rishi Khosla: OakNorth was founded by Rishi Khosla and Joel Perlman in 2015 to address the challenges they faced in securing debt finance from high street banks for their previous business. OakNorth is a leading global fintech which licenses its next-generation credit analysis and monitoring platform to partner banks globally.


The platform enables banks around the world to more effectively address the debt financing needs of the Missing Middle – the growth businesses who are the backbones of economies and communities globally but who have been in banking’s blind spot for decades. It is currently being licensed to 17 banks globally, including OakNorth Bank in the UK which since its launch in September 2015, has lent over £4bn to British businesses.


What are the main products that OakNorth offers, and how do they differ from others in the market?


Outside of the UK, the product we offer is our next-generation credit and monitoring platform. The platform leverages machine learning, decades of credit expertise and massive data sets (including unconventional and previously unavailable data) to model a forward-looking view of a borrower’s financial situation, that’s informed by industry benchmarks, macroeconomic drivers, and scenario analysis specific to that business. The benefits to the partner banks licensing the platform are:

  • The way borrowing should be – loans that are customised for the borrower’s individual needs and completed in days or weeks vs months, leading to accelerated revenue and business growth
  • More attractive economics & scaled growth – origination and credit teams who can transact several times more deals per year
  • Insight and foresight without the noise – larger data sets and deeper analysis enable more informed credit decisions and proactive portfolio monitoring delivers better credit outcomes

Within the UK, we provide fast, flexible and accessible debt finance (from £500k to £50m) via OakNorth Bank, to fast-growth British businesses and established property developers / investors. To date, the bank has lent over £4bn to more than 750 business across the UK, directly helping with the creation of 13,000 new homes and 17,000 new jobs. The bank also offers a range of savings accounts – fixed-term, easy-access, and notice accounts, as well as cash ISAs. We have over 144,000 savings customers today.


How does OakNorth work to alleviate pre-existing problems in the market?


If you look at the global SME lending market today, a similar pattern emerges. When it comes to loans of £500k or less, big banks and platforms such as Funding Circle, Kabbage, Ant Financial, Lending Club, Iwoca, etc. offer several debt options including small general-purpose business loans, asset finance, and invoice finance. To make this commercially viable, lending is typically based on automated credit models which allow lenders to process loans quickly and efficiently.

When it comes to loans of £25m or more, banks can justify allocating significant amounts of time and resource to underwriting because the potential returns are greater. Loans that fall outside these parameters however (i.e. those between £500k to £25m), are typically either too large to be subject to the automated credit process that can be undertaken with smaller loans (as it is difficult from a risk perspective to justify automating this size of loan); or too small to be underwritten in the way that big banks do with large loans because the potential returns don’t make it commercially viable. As a result, this segment of the market – the Missing Middle – has been overlooked and underserved for decades.


Our next-generation credit platform, OakNorth, is how we’re solving this problem globally – providing borrowing the way it should be.


How has OakNorth developed from when they were first founded?


Since our launch in 2015, we’ve developed in a number of ways; an obvious one is the fact that we’re now licensing the platform that’s helped OakNorth Bank to be so successful in the UK, to other banks and lending institutions around the world, so that they can replicate that success in their own markets.
The platform team is also now a large and global team with offices in London, New York, Singapore, Hong Kong, Shanghai, Istanbul Gurgaon and Bengaluru.

In the UK with OakNorth Bank, we now have a national footprint with teams in several regions outside of London. We have also raised over a $1bn from investors which has meant that are already very ambitious growth plans have been increased further.


How has OakNorth been able to maintain a ‘personal touch’ to their business?


We have a strong set of core values at OakNorth that have enabled us to maintain a personal touch and a high quality customer service, whilst scaling our teams globally. These core values underpin how we run our business and we look for these qualities in all our staff:


  • 10X: aiming to offer our customers products and services that are 10 times better than the competition.
  • One team: working collaboratively to achieve the best results for our customers.
  • Momentum: ensuring that we put energy and drive into everything we do.
  • Saying it as it is: being open and transparent with all of our stakeholders.
  • Right ambition: understanding our purpose and conducting our business in an ethical way.
  • Zero Base: our hunger for excellence and 10X mean we constantly zero-base, adapt to our changing environment and are not captive to outdated thinking.
  • Customer Delight: consistently bringing an element of magic and unexpectedness to the customer experience that goes above and beyond their expectations.


What is OakNorth’s five-year plan?


We want to continue licensing the platform to banks and lenders around the world, as this in our view, is the most effective way to ensure businesses around the world get the finance they need to pursue their growth ambitions, and in doing so, enable communities and economies around the world to thrive. We’ll be announcing more clients using the platform over the next few months so watch this space!

We also want to continue leveraging the platform to grow OakNorth Bank’s loan book in the UK. Last year, we expanded our regional footprint with debt finance directors in Manchester, Bristol, Birmingham, Leeds and East Anglia. We will continue to grow it this year and continue supporting British businesses and house-builders at the time they need it most.


What does OakNorth do to stay one-step ahead of its competitors in the market?


We don’t tend to look at what ‘competitors’ are doing in the market. Instead, we try to stay completely focused on what we’re doing to ensure we’re providing our customers with the best experience we can.
Being the only new bank in the UK that is profitable helps us stand out from the crowd as we’re not burning through cash – we recently released our Annual Report for 2019, revealing a pre-tax profit jump of 95% to £65.9m, up from £33.9m in 2018.


We achieved this by having an incredibly focused proposition and not getting distracted by trying to offer lots of different products and services. Our platform enables us to offer a superior lending experience which borrowers are willing to pay a premium for.


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