Oaknorth founder accuses lenders of underserving SMEs for years
Challenger bank Oaknorth is diving into the business banking market as founder and chief executive Rishi Khosla called out lenders for overlooking small and medium-sized enterprises (SMEs) amid the highest insolvency rates in 14 years.
He told City PM that SMEs have generally been underserved by lenders since he launched Oaknorth in 2015.
The digital bank announced today that it is offering a new range of products and services, including business savings and current accounts.
The move puts Oaknorth in more direct competition with the country’s major banks.
Khosla said the firm had seen customer demand for operating accounts, savings accounts, cards and payments.
The bank, which has lent more than £10bn to date, specialises in lending to businesses with revenues of between £1m and £100m — or companies in the “Missing Middle”.
“The simple fact is that they just do not get the service and the support that they need to be able to achieve their ambitions,” Khosla said.
“What the big banks do is they almost overlook this segment because they’re so focused on the consumer segment, micro business and then corporate.”
In a phased beta launch of the offering, businesses will be assigned a dedicated account manager who can provide tailored advice.
Oaknorth partnered Atom Bank earlier this year to call on then business secretary Grant Shapps to improve small businesses’ access to borrowing, warning that failure to do so could damage the UK economy.
MPs are due to start hearing evidence tomorrow as part of the Treasury Committee’s inquiry into SME lending, with Oaknorth having given a written submission.
The committee is looking into how easily small firms can access funding, the regulation of SME lending and whether the government could do more to support business growth.
Oaknorth has become one of the country’s best-known challenger lenders, with more than 800 staff and a valuation of $2.8bn in 2019.