Fintech Insider Podcast by 11:FS
00:18:52 · Valentina Kristensen
[00:18:52] S3: Yeah. Sure. Well, they... You've kind of run run through the numbers there. I mean, you know, really great to see, again, you know, strong double digit growth despite, you know, so much uncertainty last year. If you think about what Oak North does, obviously, raising deposits and then using those deposits to to fund lending to SMEs. You know, very much there was a view that because of Brexit, because of the general election that you'd see demand for loans dry up, demand for business loans dry up and you know what's great is that we continue to see you know high demand, we continue to support those businesses, you know, and obviously, you know, we've got now, unfortunately, more uncertainty with coronavirus. But, know, we've still got over 2,000,000,000 of qualified deals in the pipeline. So the hope is that you will still see, you know, strong businesses. I think what this demonstrates is that even in times of economic uncertainty, you know, some will see a threat, but there'll be an opportunity for others. Right? Yeah. Whether it's, you know, you're a recruitment firm and one of your competitors goes out of business and then that's an opportunity for you to gain those clients or gain their best talent. You know, it might be that there's a a property company that can then buy up, sites at a discount. So there's... You know, there will always be opportunity in times of turmoil, and and the strongest businesses will be able to thrive, not just survive.
00:20:12 · Ross Gallagher, Valentina Kristensen
[00:20:12] S0: Yeah. I completely agree. I think what what came out quite nicely in in in terms of what you've just said as well is is it's not just a a boon for Oak North, but it really is a boon for the British economy. Right? And, you you know, I think that that sort of missing middle, those small businesses that I think are the backbone of the British economy and I... You know, it it have been so underserved. [00:20:33] S3: Well, it's those it's those middle businesses. Right? I think you always hear small businesses are the backbone of the economy, but actually, if you think about the corner shop where you buy your your newspaper, you know, they're probably not really, you know, contributing that much in terms of GDP growth, you know, in terms of jobs creation, in terms of productivity. It's, you know, the Lyons Mhmm. Which might have, you know, 60 sites now across The UK hiring thousands of people, you know, paying huge amounts in in taxes. So that is, you know, those are the ones... It's those sort of the missing middle who are the the real drivers of of of productivity, of growth, you know, they're they're the ones that sort of scale up businesses, I'd say. [00:21:10] S0: And those those Oak North loans have enabled those businesses to create almost 12,000 new affordable and social homes, 17,000 new jobs. Yeah. I mean, you know, genuine, demonstrable [00:21:22] S3: Multiplier. [00:21:23] S0: Meaningful benefit in the British economy.
00:21:23 · Ross Gallagher, Valentina Kristensen
[00:21:23] S0: Meaningful benefit in the British economy. [00:21:25] S3: Yeah. I mean, I think also, you know, the the the point here is that having a very focused business model. Right? So we... We're not trying to be all things to all people. You know, we're just focusing on doing one thing really, really well and then going very deep on that. Whereas if you look at some of the other fintechs, obviously, they've taken a strategy which is, know, you to try and do a lot of different things, to gain, you know, to gain market share, to attract customers because maybe that customer doesn't necessarily want to have them as their current account, but they wanna use them for stock trading or they wanna use them for buying gold or whatever the the latest thing is now, buying crypto. So I think, you know, by being really, really focused and then obviously the efficiency that the platform has helped us to to get. So, you know, if you look at other metrics, you know, cost income ratios, you know, run rate is 26%, ROE, return on required equity is is 22%, you know, you compare that to the figures from other banks and and, you know, that's dramatically different. [00:22:21] S0: Yeah. Absolutely. I I I know Rishi as well sort of believes in not spending money that you're not gonna get back. I know I've heard him say that a couple of times. And and and I suppose the contrast being other fintechs that are prioritizing scale. I think that's something that is sort of really ingrained in the Oak North culture.
00:22:21 · Ross Gallagher, Valentina Kristensen
[00:22:21] S0: Yeah. Absolutely. I I I know Rishi as well sort of believes in not spending money that you're not gonna get back. I know I've heard him say that a couple of times. And and and I suppose the contrast being other fintechs that are prioritizing scale. I think that's something that is sort of really ingrained in the Oak North culture. [00:22:37] S3: Yeah. I mean, I think the guess... The thing is because the the Feet headline said, you know, profits have have grown, you know, but growth has slowed. I mean, the reality is that when you're... You can't have triple digit growth forever. Right? Because the the the sum gets larger. And I think we'll see... You know, we'll continue to see, hopefully, double digit growth on the bank and and then triple digit growth for the for the platform.
00:22:58 · Sarah Kocianski
[00:22:58] S1: Yeah. I mean, I think interesting from from my perspective, I I always use Oak North as kind of the the example for the... I call them the neobank will never be profitable brigade. And I'm like, well, there are there are other examples outside of Oak North, but Oak North is, you know, the best one, the easiest one to hold up. And I think it exactly... The model you have speaks to the fact of doing one thing. Well, I would say doing one thing and doing it really, really well. But I think that the one thing that Oak North has done really, really well is that platform is that model is getting the underlying kind of business basics right for working out who you lend to, how much you lend to, etcetera, etcetera. And then, of course, I I haven't read through the numbers in detail, please forgive me. But I'm fairly sure that the platform part of the business will be contributing significantly to to that profitability because other institutions are using it. And why wouldn't they if it's proven so successful for Oak North? I think that just goes to show that actually the one thing you do well doesn't have to necessarily be on the customer end. It doesn't necessarily have to be that kind of new interface or shiny new app or whatever else it is. It can actually just be looking at part of a of a financial organization of a bank that just hasn't changed for hundreds of years or not hundreds of years, but probably in the case of a platform like that and the models it's using fifty, sixty, seventy, eighty years. I'm thinking if we did that bit right, everything else around it will probably come right as well. So, yeah, I just like... I like the diversity of the model.
00:24:15 · Ross Gallagher, Valentina Kristensen
[00:24:15] S0: Yeah. I completely agree. And I think it's another example of where you guys have been quite strategic. Obviously, you've looked at the platform as a way to expand internationally where... But it also allows you guys to really hone in on The UK and what you do particularly well. [00:24:29] S3: I mean, another thing, I guess, I mean, it was picked up less, which I I guess is to be expected. But the fact that we became one of the first banks globally to achieve net carbon zero, which is something else that we're, you know, super, super proud of. I mean, for scope one and two emissions. So, I mean, I won't go into the sort of boring detail of scope one and two... What scope one, two, and three emissions. But, again, you know, it's it's sort of looking at our carbon footprint, every flight that our employees take, you know, the cost for our our IT servers, you know, AWS, you know, those those big, you know, those... The the big servers you'll see out in the desert. So, you know, I think we're we're just really mindful of of, you know, being sustainable in terms of economic sustainability and having a business that makes sense, but also being sustainable in terms of, you know, doing what's right for, you know, the businesses that for the environment that we're we're obviously in and for the the communities that we're obviously, helping to grow. Can I