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HomeBank CapitalFintech Startup Lands Deals With Fifth Third and Capital One

Fintech Startup Lands Deals With Fifth Third and Capital One

  • London fintech startup OakNorth has won two major new clients for its credit intelligence suite.
  • Capital One and Fifth Third Bank have signed up to use OakNorth’s default prediction software.
  • The move is part of an expansion of the company’s US operations following a recent deal with PNC. 
  • See more stories on Insider’s business page.

London fintech startup OakNorth has agreed deals with two of America’s biggest banks as the company’s push into the US intensifies.

Capital One and Fifth Third Bank will use OakNorth’s “credit intelligence” software, which analyses a bank’s loan book to determine which facilities could be at risk fo default, Insider can reveal. The two banks rank 12th and 17th in the US by assets held and join PNC (10th by assets in the US) as customers of OakNorth. 

OakNorth is largely split into two different arms. In the UK, it acts as a challenger bank that issues loans ranging from £500,000 ($698,000) to £45 million ($63 million) to SMEs.

Internationally it licenses its software to other lending houses around the world.

The company’s own research, previously seen by Insider, indicates that the SME loan market in the US is about $1.6 trillion with OakNorth continuing to push for more business stateside.

“This is a gamechanger for us, going from one bank to three shows our approach has legs and is great validation for the business,” OakNorth co-founder Rishi Khosla told Insider in an interview.

“These banks have incredible resources and usually believe that they can do everything themselves with those resources so the fact they are choosing to use someone else for something as important as credit intelligence shows there is something very strong here.”

The software gives lenders a “granular approach” to the credit process, Khosla said. Rather than the conventional “top-down view” of a dozen macro sectors, OakNorth has built a new “framework to look at new loans.”

Khosla previously told Insider the company had set up scenario analysis on 204 different subsectors of the economy. He said bank models were “not set up for risk weighting” and that the lockdowns that had taken hold during the pandemic had meant different analysis was required.

When conventional banks assign loans, they often use a small set of macro sectors to determine the risk and cost of the debt.

But OakNorth’s software offers a more extensive and malleable process to more effectively determine the risk profile of a company. The promise is that banks can more safely allocate cash from their loan book and more efficiently set the price for companies.

Continued expansion

In 2018, OakNorth raised $390 million from SoftBank’s Vision Fund as part of a wider $440 million round — one of the biggest funding rounds…

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