Former head of the Financial Services Authority (FSA), Lord Adair Turner, has joined the board at a new online bank for SMEs called OakNorth. He will be joining as a non-executive director, together with Ratan Engineer and Robert Burgess.
The new bank specifically aimed at small businesses will provide an alternative to the traditional bank lender, as research continues to highlight the difficulties SMEs face when securing finance for their business.
Different from other alterative lenders, like crowdfunding and peer to peer lending platforms, this new lender will have a bank license, therefore it will be fully regulated by the Financial Conduct Authority (previously FSA) and the Bank of England. Lord Turner stated he does not believe peer to peer lending is viable long-term as an economic downturn could result in considerable losses. This could create an unreliable source of finance.
Lord Turner continued, “Fast-growing small and medium sized businesses play a pivotal role in the economy, but they find it more difficult to access finance in Britain than they would in many other countries, such as the US or Germany. OakNorth understands that it doesn’t have to be this way, and we see an opportunity to focus on this market of growth SMEs, be more flexible in the range of collateral we accept from them and invest in IT that improves customer service.”
Financial technology that’s usually used for larger companies will be made available to OakNorth’s clients, enabling a faster service for small companies. The system won’t just accept property but other assets too, something with other lenders fail to do.
The bank will start lending and taking in retail deposits this summer.