One of Europe’s most valuable fintechs and possibly its only profitable challenger bank, OakNorth announced pre-tax profits for 2019 of £65.9 million last week, nearly doubling its figure of £33.9 million from the year before.

“We don’t see ourselves as a challenger bank, as we’re not ‘challenging’ anyone to do things cheaper. On the contrary,” Cristina Alba Ochoa, OakNorth’s CFO, says.

Head of growth, Valentina Kristensen, adds: “We’re not the cheapest, but we have such a focused proposition. We raise deposits to help fund lending to businesses.”

She compares this to other fintechs, who are “trying to be all things to all people”, offering current accounts, credit cards, stock trading and so on.

Kristensen also suggests that these players are attempting to “replace banks around the world,” whereas OakNorth are not taking a competitive approach, but are collaborating and partnering with banks to enable them to serve SMEs with lending in their own markets.

“Obviously, if someone comes along who does specialise in the same area as us, then we would be competing with them,” Alba Ochoa adds.

This competition could come in the form of Metro Bank, who last week announced a partnership with Ezbob to provider a digital business lending platform.

Kristensen however stresses that OakNorth’s proposition is built more for the scale-up than the startup.

“If you look at what Metro are doing with Ezbob, similar to Funding Circle, iwoca, Kabbage and several others, they are aiming for the small businesses: loans in the £10,000s up to maybe £100-200K.

“We’re more interested in the next stage of growth, hence why we talk about aiming for the ‘missing middle’ of SMEs that have always been underserved by business banks.”

Coronavirus crisis requires urgent and agile action

OakNorth and its clients are staring at a prolonged period of uncertainty amidst the Coronavirus pandemic. The bank has called for a set of initiatives from the UK government to implement immediately in order to support small and medium-sized businesses through this challenging time.

The government is set to underwrite loans to businesses adversely affected by the outbreak as part of a programme that will be delivered by the British Business Bank (BBB) and will replace the existing Enterprise Finance Guarantee Scheme (EFG).

The EFG scheme was aimed at encouraging lenders to grant loans to businesses that would have otherwise been regarded as too risky, with the government guaranteeing the debt.

Alba Ochoa tells Finextra Research that “this is not really anything new. It is a re-labelling of something that already existed.”

The Big Four UK banks are all already party to EFG, as well as dozens of other lenders.

However, the scheme will not be available to entrants like OakNorth who are not already onboarded with EFG.

A statement from OakNorth has stated that for the Coronavirus Business Loan Interruption Scheme to have the desired effect, it needs to be based on a relaxed eligibility criteria, with all loans eligible that were not already stress cases before the crisis.

The BBB has stated that while the will the scheme will operate in a similar way to EFG, it will do so “on more attractive terms” for businesses and lenders.

As part of the new scheme, the BBB will guarantee 80% of loans of up to £1.2 million and waive the 2% annual fee that borrowers were charged for using EFG.

The clock is ticking

OakNorth believe the scheme must be deployed this week in order to assist companies in industries like aviation, tourism and retail who require liquidity in very short order to continue to function.

“We are now trying to work with the Treasury to see if there is a more agile way to ensure that those funds reach the SMEs and do not stay with the Big Four banks,” Alba Ochoa says.

This view is shared by Stephen Jones, chief executive of UK Finance.

“The impact of COVID-19 is already starting to be felt by smaller and medium-sized businesses around the country, so it’s essential that we get this scheme up and running within days and that it is simple to access,” he told The Times.

There have however been concerns raised by banks and other businesses of the lack of clarity over timescale for onboarding to the new scheme.

Drawing comparison with the preceding EFG programme, Alba Ochoa says: “The BBB explained to us that it would take more than nine months for any bank to be onboarded to the programme."

It is understood that the BBB will be laying out the eligibility criteria for the new scheme in the coming weeks, a timescale that is sure to cause not a few sleepless nights for companies in many industries.