OakNorth, backed by SoftBank, inked a five-year deal with Dutch bank NIBC, as traditional lenders are eager to team up with innovative startups and find AI and data-driven solutions that make the process of borrowing money more seamless and efficient.
The agreement announced on Tuesday is the first since OakNorth in February hauled in $440 million from SoftBank and others, in a deal that valued the startup at $2.8 billion. NIBC will use OakNorth’s AI-driven software to help it make decisions about small business loans. OakNorth Chief Executive Rishi Khosla said more deals are coming, and that the company is “engaged with over 10 banks from today, and behind that there are at least another 10 which we are actively working with.”
The latest pact is a vote of confidence in OakNorth’s ability to make money with its proprietary software. The deal comes after OakNorth went on a hiring spree that expanded staff from 300 to 500 in just five months, adding software developers, credit experts and product designers
Highly-valued startups, so-called unicorns, like OakNorth have faced scrutiny on whether they are able to deliver on their high valuations, even as they continue to be popular with investors.
NIBC plans to move part of its corporate loan book onto OakNorth’s platform; CEO Paulus de Wilt saying the partnership will help the bank better serve mid-market clients and “enhance efficiency in the credit monitoring process with richer data.”
SoftBank continues its big bets on companies poised to disrupt traditional players in their respective industries. SoftBank contributed to a Series B financing found that raised $250 million for India’s ride-sharing company Ola Electric.
Karma Takeaway: The deal demonstrates that the ongoing disruption in fintech is showing no signs of slowing down. It also suggests that OakNorth’s high valuation may be justified, if it’s able to continue to prove its ability to close such deals with other banks.