Cascade Commentary

August 2021

By Dr Emma Black

Cascade tracks every single bank and building society in the UK savings market and often many of our clients have never heard of so many of the providers that are offering the best rates in the market. We thought we would shine a spotlight in each issue on each different bank, particularly those in the top quartile offering the best rates, so that we raise awareness on the vast choice available for savers to diversify their cash while earning better rates of return than the dominant high street lenders.

First up is OakNorth Bank. OakNorth Bank secured a full banking licence from the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) in March 2015 and began deposit taking and lending six months later. But Oaknorth’s story started a decade earlier in 2005 when co-founders Rishi Khosla and Joel Perlman were looking for a working capital facility to support their growing financial research outsourcing business.

Having approached numerous high-street banks, Khosla and Perlman kept getting different variations of the same response – “Computer says No”. These rejections were given despite having a profitable business with strong cash flows and retained clients. Because the size of facility was small, Khosla and Perlman found many of the high street banks weren’t interested as the revenue they’d generate helping the business was not going to offset the costs of analysing the opportunity.

Khosla and Perlman kept searching and a few months later were able to secure a 100x the amount of debt facility for a dividend recap. This originated from the institutional division of a bank but the commercial lending arm had been unable to help them. The founders scaled their business to 3,000 employees and in 2014, it was sold to Moody’s Corporation.

The experience they had faced as entrepreneurs growing a business was one that stuck with Khosla and Perlman and in 2015 they launched OakNorth Bank introducing the ON Credit Intelligence Suite. Built over 5 years, the ON Credit Intelligence Suite has propelled OakNorth Bank in the UK into the top 1% of commercial banks globally in terms of ROE, efficiency ratio, and Net Promoter Score. Additionally, the software has also been shared with other leading banks around the world, including Capital One, Fifth Third, PNC, ABN-AMRO and SMBC.

OakNorth today exists to lend to what they call the Missing Middle, with a focus on giving today’s entrepreneurs access to the capital they need to grow, create jobs, build communities, and power the economy. Their mission is to transform commercial lending so entrepreneurs can thrive and their proprietary technology gives banks a 360-view of their borrowers, delivering extraordinary insight, and enabling faster, smarter credit decisions to open up new, profitable markets.

The founders intent for savers is to deliver competitive interest rates that will deliver greater returns on deposits, while also supporting the UK’s entrepreneurs and fast-growth businesses. The bank takes its role in society seriously and states the following four key impacts as core to its being: 

1. Human rights and equality: OakNorth take due care in providing lending services to businesses, individuals and organisations that treat their employees, customers, suppliers and all other stakeholders fairly and in accordance with their human rights.
2. The environment: OakNorth take due care in providing lending services to businesses, individuals and organisations that conduct their activity in an environmentally responsible way.
3. Animal rights: OakNorth take due care in providing lending services to businesses, individuals and organisations that conduct their activity without the exploitation of animals of their environments.
4. Economic development: OakNorth take due care in providing lending services to businesses, individuals and organisations that conduct their activity in a responsible way according to the rules and regulations in the markets in which they operate.

As of today, OakNorth are presently offering the following savings products:

Should you wish to learn more about OakNorth Bank, please do give us a call or feel free to visit their website at oaknorth.co.uk.