OakNorth Justifies Its Valuation with NIBC Deal

OakNorth, the UK financial technology company that has a valuation of $2.8 billion as of February, inked its first deal with a bank, announcing earlier in July it landed NIBC as a customer.

Under the deal, NIBC will use OakNorth’s software to help it better underwrite small business loans.

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“NIBC will be able to leverage the OakNorth platform to enhance efficiency in the credit monitoring process with richer data,” said NIBC Chief Executive Paulus de Wilt, when announcing the deal. “It enables us to even better serve our mid-market clients on their decisive moments. This initiative matches our core values, entrepreneurship and inventiveness, and helps us to further boost innovation."

The deal with the Dutch lender marks the first enterprise agreement OakNorth inked as it looks to make money offer its software. OakNorth Chief Executive Rishi Khasla said more deals are coming, declining to provide any more details in an interview with Reuters. “We are engaged with over 10 banks from today, and behind that there are at least another 10 which we are actively working with,” the executive said in the report.

OakNorth, one of the UK’s most valuable FinTech unicorns has been growing at a rapid pace as financial companies turn to artificial intelligence and machine learning to cut costs and better underwrite loans. The FinTech runs a bank in the U.K. that offers loans to small and medium-sized businesses and also operates its platform that relies on AI and data analytics to help lenders make better underwriting decision. It's the latter business that has piqued the interest of venture capitalists and resulted in the deal with NIBC.

In February OakNorth raised $440 million in funding from the SoftBank Vision Fund and Clermont Group, with investors expressing excitement about the speed and quality of the company’s small and medium-sized business lending origination and its ability to monitor its loan portfolio thanks to its machine learning platform OakNorth Analytical Intelligence. With the round OakNorth has raised more than $1 billion, which it said is more than any other European based FinTech. It is now ranked as one of the most well-funded FinTech companies in the world. Proceeds from the round are going to expand into the U.S. The deal with NIBC helps OakNorth justify its valuation and show its worth the money it raised.

Since landing the round of funding OakNorth has been in growth mode. The company had around 300 employees in February and that has grown to 520 as of July. OakNorth has been bringing on software developers, experts in the field of credit as well as product designers. With the company setting its sights on expansion in the U.S., Europe, and Asia, the headcount is only expected to increase.

“In NIBC, we’ve found a committed partner who shares our vision to fix small and medium-sized business lending in this market,” said OakNorth CEO Khasla when announcing the deal. “After nine months of working together, NIBC has now decided to enter a five-year commercial agreement with us which is a testament to the positive impact they can see the technology having on their commercial lending business going forward.”