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OakNorth to provide US Customers Bank with credit platform

UK credit and monitoring platform OakNorth has signed a commercial agreement with Customers Bank in its first publicly announced US bank partnership.

The agreement came at the right time for the bank to leverage the platform’s 360-degree loan monitoring in the economic environment caused by the COVID-19 crisis, and in the long term, OakNorth will help Customers Bank increase and expand commercial client relationships and bolster its credit and risk culture.

Commenting on the partnership, Valentina Kristensen, Director, Growth & Communications at OakNorth, told IBS Intelligence that the two companies were working together before the crisis, “however, in the immediate term, the focus is on helping them manage portfolio risk associated with the COVID-19 crisis”.

She explained that in order to help platform partners such as Customers Bank with immediate challenges, it examined all of the bank’s loan books and ran reverse stress tests to determine the most vulnerable businesses in its portfolios.

Valentina Kristensen, Director, Growth & Communications at OakNorth

Valentina Kristensen, Director, Growth & Communications at OakNorth

“We then created a ‘COVID vulnerability rating’ by identifying which businesses could withstand six-week, three-month or six-month shutdowns, and instead of making assumptions about an industry as a whole, such as restaurants, for example, we assessed the risk of each individual entity based on their unique circumstances – such as: will they still be getting revenue from deliveries or take out? How much do they have in cash reserves? Are any of their sites in less affected states or cities staying open/still trading? Etc.,” Kristensen said.

The OakNorth platform has 17 bank partnerships around the world, including NIBC and OIMIO in the Netherlands, and OakNorth Bank in the UK.

Kristensen added: “We have other partners in the US, but Customers Bank is the first one we’re announcing publicly. There at several thousand banks and lending institutions in the US, so it is THE key market for us in terms of scaling the platform.”

Customers Bank provides a range of banking and lending services to small and medium-sized businesses, professionals, individuals and families. Products and services are available across the U.S. wherever permitted by law through mobile-first apps, online portals, and a network of offices and branches, with a high tech strategy which has enabled it to grow assets from $250 million to $11.5 billion over the last decade.

In the long term, OakNorth hopes to support Customers Bank with a number of measures: enhancing portfolio management capabilities with new market insights; further strengthening customer engagement and credit quality; speeding up underwriting and loan processes; improving portfolio risk management through the use of big data and AI; and providing relationship managers with a deep understanding of borrowers and industry verticals.

“We were already working with Customers Bank before this crisis, so the implementation is done. However, even for new clients, the implementation is very easy and takes only a few days as it is not reliant on any other bank systems and is fully cloud-hosted,” Kristensen said.

Jay Sidhu, Chairman and CEO of Customers Bancorp, said: “Customers Bank uses a ‘high tech, high touch’ approach to delivering exceptional service. We are optimistic about the economic recovery that will come in the months ahead. When that time comes, the OakNorth platform will enhance our portfolio management capabilities.”

Rishi Khosla, Co-Founder of OakNorth, commented: “Customers Bank has a clear understanding of the positive multiplier effect that supporting these businesses can have, and is partnering with us to ensure it can more holistically and profitably address their unique needs.

“Of course, we are currently in the midst of an unprecedented crisis, so in the short term, we will be working with Customers Bank to help it manage the portfolio risk associated with this.”

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