OakNorth wants to embed custom-built GPT tools powered by OpenAI into the core of its digital banking platform that serves over 215,000 customers.
OakNorth, a digital bank of British origin, has collaborated with the developer of the popular ChatGPT bot, OpenAI, to improve the speed, personalisation, and efficiency of its services for mid-sized businesses.
Since its launch almost a decade ago, OakNorth has been using machine learning technology to streamline and improve the way it assesses credit for middle-market businesses, often underserved by traditional banks. The technology it leverages is developed by OakNorth’s sister company, ONCI.
The ON Credit Intelligence (ONCI) platform is cloud-based software designed to transform commercial lending. It features advanced tools for credit analysis, risk management, and portfolio monitoring. For instance, the platform creates a well-rounded borrower’s profile combining historical financial data with forward-looking insights, and includes tools like the Climate Scorecard and Scenario Analysis to evaluate transition risks and financial impacts related to climate change. The technology allows the challenger bank to quickly and accurately evaluate complex credit scenarios, enabling faster yet well-informed lending decisions and personalised financial solutions.
So far, according to OakNorth data, the fintech entity has lent approximately $17 billion to businesses in the UK and the US, achieving a high efficiency ratio of 29%. For less than two years of operations in the U.S., the firm managed to provide over $1 billion in business loans to local enterprises.
With the integration of GPT-powered tools modified specifically for its corporate needs, OakNorth aims to achieve even greater efficiency in multiple internal processes, such as deal structuring, term drafting, and real-time query handling.
The new GPT models will enhance the digital bank’s data analysis during the loan assessment process, speeding up credit evaluations and improving decision-making accuracy, especially when it comes to identifying risks. As for automation, they can draft and review loan agreements and other financial documentation, ensuring consistency and reducing manual errors, while also checking regulatory compliance and flagging potential issues in real time.
Generative AI chat interfaces can also respond instantly to client inquiries, reducing wait times and improving client experience. Besides, using natural language processing, such tools streamline the creation of deal terms, making it easier and quicker for OakNorth to structure these complex financial agreements.
Mid-sized businesses play a crucial role in the economies of both the UK and the U.S. However, they frequently encounter significant challenges in accessing credit.
Thus, a recent report by Allica Bank highlighted a £90 billion lending gap in bank financing to UK SMEs, as the approval rates for SME loan applications have declined to below 50%, down from 67% in 2018.
In the U.S., more than three-thirds of small and mid-sized businesses are concerned about access to credit capital, while globally, over 40% of SMEs have their financial needs unmet.
