“I’m Ben Barbanel, I’m Head of Debt Finance at OakNorth Bank in the UK where I lead a team of 30 relationship managers. The last year of lending has been difficult for OakNorth. The market has really challenged us to think about how we can do things differently to really support our lenders in what they’re trying to achieve whilst being in the middle of a pandemic. This obviously had an additional challenge. That said, we still then over £1,000,000,000 into the UK market, enabling customers to consolidate and grow where possible. Yet OakNorth approach is really different to the mainstream lenders here in the UK. We are commercial, we act at incredible speed and we get things done.
We come up with a solution that fits the business requirements. That’s not always a yes, but borrowers like quick no’s as well as quick yes’s. And ultimately we are here to serve our borrower’s requirements. Where the On Credit Intelligent Suite has really helped our relationship managers is that typically they would do industry research, comparative research, or every specific deal and sector that they were working on. The product really gives them that data at their fingertips to enable them to build that into their analysis automatically. And therefore, ultimately what that means is they can transact maybe ten times the amount of deals that they would otherwise be able to do.
The technology is really giving us a granular view of every industry that we look at, and it helps us to really pick out nuances of each individual sector that we work with. If you take the example of a very high-end Michelin-starred restaurant versus a local takeaway, clearly the dynamics and the credit parameters within those two businesses, although they are in the overall same sector, are clearly very different. And that’s a great example where the product helps us.”
“We were introduced, as you know, by one of our large largest institutional investors who asked the question who was really good question know, how are you sure that your credit is as good as your credit thinks as you think it is? And we talked about the regulatory stress test, and we have an internal credit review function and we get challenged. We have a second and third line. And in the standard traditional three lines of defense, that challenge it. The fact was right we didn’t have a strong third party challenge piece to it.
That was the beginning of the relationship. I think if you fast forward a little, we were studying it and then COVID hit and COVID at least, you know, early on it was intimidating given that it was an unprecedented, certainly in our lifetimes, unprecedented, you know, medical crisis which morphed into a credit crisis and, you know, we were uncertain about what credit was going to do. We were uncertain about what the policies were going to be around it. And and a lot of the other facts.
So we quickly moved from studying phase to, you know, certainly catalyzed the engagement to say, hey, we think we’re trying and we’re trying to do our best job to it to identify and here’s the most exposed sectors of our book and but having a second look with with your software in your process was invaluable to us, you know, both internally and as we communicated with, you know, our primary external constituencies, whether it be investors, our board is obviously internal, but and then regulators. The third party view the real life playing in the in the credit space and the experience you all have and then the agility and flexibility to run different cases, run different scenarios, redirect your efforts and to match what we need is has been incredibly helpful and insightful.”
“We have always felt we’ve had an exceptionally strong credit culture over the last decade to 15 years on it and really can take things down to the individual loan level. But we were very quickly found out that when a pandemic hits or a catastrophic event hits, it was all manual and it was extremely difficult, time consuming and painful to look at those credits, review those credits, feel like you made the correct call on your asset quality rating. And that’s part of the process that drove our discussions with OakNorth on it.
You know, as we started talking with OakNorth, we realized if we had had their intelligence suite in place, we could have gone to them and said, Please put these factors in and had really highlighted on a more forward looking basis. You know, we’re sitting here in March of 20, in the middle or the very early stages of a pandemic, and you’re looking at your hospitality portfolio and I’m looking at historical numbers that are okay. But, you know, historical numbers don’t tell me the occupancy is going to be 3%. And we needed to see who had liquidity, who had staying power. And that was some of the factors that OakNorth has as we’ve been working with them on, to have a more forward looking approach on it.
Having an independent third party validations of what your modeling is critical in today’s environment. OakNorth has allowed us to have that independent third party validation as we look at risk rating and changes and they’re having an impact on what we’re doing day to day.”
OakNorth redefines commercial credit through software that enables banks to more holistically and efficiently lend to the Missing Middle. Built over five years by an engineering and credit science team of over 250 people, the ON Credit Intelligence Suite is now deployed by leading banks around the world.