NEOBANKS OF THE WORLD: SMEs
Thenewdeal B-North is building a regional UK business bank built on old-fashioned relationships and the newest of tech. Co-founder and CEO Jonathan Thompson explains the model Fintech developments offer the chance to challenge every aspect of banking, particularly its relationships with customers and businesses. When it comes to lending to SMEs, one newcomer has identified an opportunity to offer an evolved way of organising business loans that is both cutting edge and yet curiously familiar. Based in the North of England, B-North is building a model for business lending that is regionally focussed, establishing itself as not just another bank that views the UK through a London lens. Conceived before the pandemic, it will be offering secured loans in the scaleup sweet spot between £500,000 and £5million for those businesses that rely on core, committed debt finance – a lending market that has remained relatively undisrupted, both from a technology and lending model perspective. Co-founder and CEO Jonathan Thompson is part way through a £20million series A fundraising round and awaiting B-North’s full banking licence approval. He explains: “What we’d been seeing, in the business finance market was that there www.fintech.finance
was lots of innovation happening around the microfinance agenda. For a business looking to borrow, say, £50,000, £75,000 or even £100,000, you could probably do that via an app on your phone, and do it very quickly, very efficiently. But we’re here to transform the lending market for the core SME marketplace, which is scaleups and slightly more complex established businesses – to disrupt that segment with a transformational delivery.” B-North sets out to prove that there is a way to have a more advantageous and direct relationship with your lender – countering the complacency shown
It’s old school, in terms of having a people-based frontend, but the heart of the business is pure Cloud. It’s a true hybrid, designed specifically with SME borrowers in mind
towards this sector over the past few years by big banks, many of whom have shrunk their business lending teams and withdrawn from the community, so that they no longer have any direct relationship with business customers. B-North sees SMEs for what they are – the lifeblood of the UK economy. But they are often perceived to get a raw deal from banks. As a former banker with Santander where, among other roles, he was responsible for the bank’s relationship with mid-cap and large corporate customers in the North East, Thompson understands why that might be. “The banks are operating on very centralised models and there’s been no material investment in serving the SME market,” he says. “SMEs are difficult to serve, anyway, because they are complex. They grow in an organic way, not in a linear way, so they don’t naturally lend themselves to pure automation – and banks want to automate to reduce cost, because their profit pools are getting nibbled at by tech innovators. All that gives us an opportunity to turn the model on its head, and really look at what the market craves.” Issue 6 | ThePaytechMagazine
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