The Opportunity

Small and medium-sized businesses are the backbone of every economy worldwide. They represent more than 95 percent of all businesses and 60-70 percent of all private sector employment.

Commercial banks and lending institutions understand the importance of these businesses, but the costs associated with lending to them – origination, credit underwriting, due diligence, servicing and monitoring – means that most banks find it economically uncompetitive to do so.

What this means for lower
mid-market businesses globally?

Debt “products” that aren’t fit for their needs and therefore, stunt their growth prospects.

High opportunity cost of typically having to wait several months to get an answer even if it’s a “no”.

Checklist-driven lending criteria which leads to higher rejection rates.

We asked the CEOs, CROs and Heads of commercial lending at commercial banks and lending institutions across various geographies whether they would be keen to address this market need, and the answer was a resounding yes.

Our solution

Our platform is deployed seamlessly alongside our bank and lending partners’ existing credit processes, enabling them to more holistically and profitably cater to the lower mid-market market segment. It supplements the traditional method of relying on backward-looking historical data sourced from the borrower, and scenario analysis based on standard haircuts that are not necessarily linked to industry drivers (Level 1 and 2 analysis), with technology and massive data sets, to model a forward-looking view that’s informed by industry benchmarks, macroeconomic drivers, and scenario analysis specific to each business (Level 3 and 4 analysis).

The benefits for OakNorth partners are: customised loans completed in days or weeks vs months, so ultimately a better customer experience which leads to accelerated revenue and business growth; attractive economics as origination and credit teams can transact several times more deals per year; and enhanced credit and portfolio performance.

In the US

OakNorth’s offering in the US combines the platform with a very efficient origination strategy with local bankers and professional services providers, to source deals for funding partners’ balance sheets.