Technology key as challenger bank OakNorth gets licence
SME-focused challenger bank OakNorth says financial services technology will enable it to serve customers fast
Challenger bank OakNorth will use financial services technology to serve customers fast and offer a better customer experience, following the award of a banking licence by UK regulators.
The bank, which has named former Financial Services Authority chairman Adair Turner as a director, will target lending at high-growth small and medium-sized enterprises (SMEs). It will differentiate through technology and by allowing SMEs to secure loans through assets other than property.
“OakNorth will use financial technology that enables faster service and a superior customer experience,” said a statement from the bank. “It will accept multiple collateral types, not just property, unlike much of the secured lending offered to SMEs by other banks.”
OakNorth CEO Rishi Khosla said the bank will be a positive force in SME banking, “blending new technology to deliver a better customer experience with a capability to accept a wider range of collateral for loans”.
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It is this blend of technology and products that will help challenger banks win business. The traditional high street banks offer little differentiation in products and are held back by legacy IT systems not designed to meet customer expectations in the digital world.
There seems to be a new bank emerging every week in the UK, following the loosening of regulatory requirements needed to set up in business as a bank. This was an attempt by UK regulators to increase competition in the banking sector due to a lack of choice and a shortage of lending, particularly to SMEs. This is significant when you consider that when Metro Bank opened its doors in 2010 it was the first new company to be granted a banking licence in 150 years.
“We see an opportunity to focus on this market of growth SMEs, be more flexible in the range of collateral we accept from them and invest in IT that improves customer service,” said Turner.
A recent survey of 2,000 people by banking software supplier Fiserve revealed that 80% of people would trust a bank if it had the right technology in place.
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