OakNorth bags Modern Bank as second US customer
OakNorth has announced New York-based Modern Bank as the second US bank to use its lending platform.
The UK fintech, which began outsourcing its self-built lending technology to banks abroad in September 2018, was selected by the US lender to help it serve businesses during the coronavirus pandemic.
The bank will use OakNorth’s platform to build out its capacity to deal with the influx of loans to be delivered as part of the $2 trillion CARES Act which aims to distribute $600 billion in payroll relief.
The latest reports suggest the country’s smallest businesses fear being left at the back of the queue for Paycheck Protection Programme (PPP) loans, as bigger companies with more organised 2019 financials take precedent.
OakNorth calculates that if ten million small and medium businesses (SMBs) apply for the PPP, banks will need to process roughly 50 times their usual annual volume in the next 30-60 days, “putting immense pressure on participating lenders”.
To help Modern Bank process this influx of applications and issue up to $10 million per loans, OakNorth says it has built “an online workflow specifically for banks participating in the PPP”.
The workflow helps with document collection and pre-screening of applications which increases the bank’s overall capacity for loan distribution.
“Modern Bank wants to support US businesses through this crisis, and we want to play our part in helping them and other banks participating in the programme, do this as quickly as possible,” says OakNorth’s co-founder Rishi Khosla.
“As we’ve seen with similar loan programmes around the world, banks are experiencing call centre and web traffic that’s up to 50 times the normal levels and are simply unequipped to deal with this level of volume,” he adds.
Last week, OakNorth partnered with Pennsylvania-based lender Customers Bank to offer up its credit monitoring software so the bank can identify weak spots in its loan portfolio.
The OakNorth platform targets what it calls the “missing middle”, businesses looking for loan amounts between $1 million and $25 million.
Currently the platform is licensed to 17 banks globally, including OakNorth’s own bank in the UK, as well as NIBC Bank and lender Omio, both based in the Netherlands.