Intel Report Digital Banking - Flipbook - Page 19
he seem to have a reservation at the hotel. It turned out Perlman was working from
a couch near the elevator.
“I asked him, ‘What are you doing?’” Barbanel recalls. “He said, ‘What do you
mean what am I doing? It’s great here. Nobody bothers you. Nobody asks you if
you want a cup of coffee. It’s a free lounge, and I can tell people I’m working in
Claridge’s.’”
Barbanel says the story illustrates the cultural frugality of the organization, which
helped the startup break even after nine months. “We don’t have any branches, and
we don’t believe in that model,” he says. “That’s highly capital intensive, both in
terms of real estate costs, rent, heating, lighting, staffing, etc. We don’t believe in
that.”
OakNorth also doesn’t try to be all things to all people. It has a relentless focus on
its customers, who are primarily focused on getting answers quickly on their loan
applications. OakNorth Bank will notify a customer within 24 hours whether it’s
interested in a loan. Borrowers generally have an answer within five to seven days
after the loan application enters underwriting, Barbanel says. “I would say 80% of
our transactions, we do have a time critical element to them, so that really appeals
to a lot of our clients,” he says. The bank lends to U.K. businesses with annual revenues equivalent in U.S. dollars of about $5 million to $80 million.
But data is one of the essential elements that sets OakNorth apart from traditional
banks, Barbanel believes. Using information from a variety of sources, it developed
predictive models of credit quality for the industries and geographies it serves,
rather than looking just at historical figures, such as a business financial statement.
For the restaurant sector, OakNorth might look at online reservation data in real
time, for example, as well as average receipts, spend per head and other factors to
determine the health of that restaurant and the sector going forward.
“Typically, the major banks would look at very much backward-looking, historic
data, and there’d be some arbitrary forecast numbers that wouldn’t really get interrogated in much detail,” he says.
Predicting the future is always difficult. Throw a pandemic into the mix, and you
might just throw in the towel on predictive analytics. But Barbanel remains opti-
“We don’t have any
branches, and we
don’t believe in that
model. That’s highly
capital intensive,
both in terms of real
estate costs, rent,
heating, lighting,
staffing, etc.
We don’t believe
in that.”
Ben Barbanel, head of debt
finance for OakNorth Bank
mistic. The Financial Times reported OakNorth had loan defaults worth $100
million during the pandemic, partly from a luxury hotel developer, but none have
resulted in a loss, he says. The bank reported profits before taxes of £77.6 million
in 2020, up from £65.9 million in 2019.
DIGITAL BANKS: PROFITS AND PURPOSE | 17