United Kingdom’s Fintech OakNorth Raised $440 Million

A meeting featuring OakNorth executives. (Photo: OakNorth)

OakNorth, United Kingdom's digital-only bank raised $440 million with Softbank's Vision Fund contribution of $390 million and Clermont Group's $50 million.

The emerging financial technology bank offers competitive finances including personal and savings accounts, business loans, and property finance. The firm provides small-and-medium-sized business (SMB) loans which range from 500,000 ($648,000) to up to £40 million ($52 million). The company currently has a loan book amounting to £2 billion ($2.6 billion).

In its 2017 financial report, the firm had a pre-tax profit of about £10.6 million ($13.7 million). The Financial Times named the startup bank as the first bank in the United Kingdom to report an annual profit. This September 2018, the company completed its £78 million ($100 million) funding round which means that the company's investors profited from the startup.

OakNorth's deal has been Europe's largest fintech fundraising to date. The deal raised the company's post-money valuation to $2.8 billion. It is now known as the region's most valuable fintech. Most start-up financing firms in Europe is gaining so far this year. OakNorth's mega-round followed N26 large gain of about $300 million which is extremely close to that of OakNorth. Fintechs in Europe were unable to secure more than $300 million in their 2018 funds which indicate that investments in 2019 started strong.

OakNorth's strategy of focusing on medium-sized companies and their ability to operate outside of the United Kingdom contributed a lot to its success. The bank believes that its fast growth is brought by its ability to service medium-sized businesses. Leading firms usually prefer big companies and alternative financers targets smaller-sized businesses.

The startup fintech now operates globally after licensing its OakNorth Analytical Intelligence technology to banks in other nations across the United States, Europe, and Asia. The bank currently has estimated assets under service amounting to $5.7 billion.

OakNorth's partners are able to save their time and resources by utilizing the technologies of the company in conducting speedy credit analysis, to extend loans, and monitor their portfolio. Its partner's strategy contributed to the company's operations outside the United Kingdom with going through the trouble of assuming all the credit risks of financing unknown investments or having to invest in acquiring banking licenses in other nations.

Analysts believe that OakNorth growth both locally and in its operations abroad will accelerate as it continues to attract high-profile investors and as it further develops its OakNorth Analytical Intelligence Technology.

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