OakNorth: breaking the banking mould on purpose

The neo bank is convinced that having a broader mission than profit helps it continue to grow, writes Sophy Buckley

Banks aren’t generally known as a force for social good. Yet neo bank and commercial lender OakNorth is making a big effort to break this mould for a number of reasons.

According to Valentina Kristensen, the bank’s director of growth and communications, having a broader mission than profit chimes with its own social purpose. But perhaps just as importantly, she says, it also helps with recruitment and staff retention, to attract the right investors – those with the same values as OakNorth – and attract customers.

“We’ve always had a strong mission, a strong social purpose. Our business model is all about supporting what we call the missing middle – businesses that haven’t had the support they need from the traditional high-street banks. We want to be the hero in the community,” she explains.

Going by its website – which triumphantly states that the bank has lent over £10 billion to entrepreneurs since it was launched in 2015 and has helped create more than 40,000 new jobs and build 29,000 new homes – OakNorth’s operations are certainly helping the community. But crucially, its ambition extends beyond the impact of its lending.

Since 2018, the main channel of this ambition has been an ongoing pledge to donate 1 per cent of group post-tax profit to charities that align with its mission. To date, that adds up to £2.3 million. While other banks give to charities, they haven’t necessarily made a cast-iron, ongoing pledge.

“The idea is to balance profit with purpose. That as a supporter of small businesses we have a responsibility to be profitable ourselves while at the same time giving back to the communities to which our clients belong, so they can remain profitable and we perpetuate a virtuous circle,” Kristensen says.

That effort falls largely into four buckets: supporting entrepreneurs via mentoring schemes; supporting science, technology, engineering and maths education, particularly for women; climate and the environment; and other. In many cases, OakNorth works with third parties.

Its Mentorpreneurship programme, for example, is run jointly with the London School of Economics, the alma mater of both its founders. It aims to match student entrepreneurs at university and school with mentors who can share skills and insights appropriate to the stage the student entrepreneur is at.

“There are lots of possible mentors, but not necessarily with immediately relevant experience. Someone who’s built up their business for 25 years and just sold it for millions isn’t necessarily a good fit. The students probably need help from people earlier in their journey,” Kristensen explains.

For STEM support, OakNorth has partnered with Maths4Girls (part of Founders4Schools) in the UK to help broaden out students’ ambitions so they might consider further education in mathematics or careers in maths-based fields. It also works with organisations in India such as Seva Mandir, for example, to open up access to education for girls.

“In the UK, it’s more about helping kids understand the applications for maths. Why it’s useful, the kind of careers you can do and that using maths doesn’t mean you’ll end up writing huge equations on a blackboard. It can be very creative as well. Abroad, we might be trying to overcome economic, cultural, social and geographic impediments that stop girls going to school.”

When it comes to the environment, the bank supports a number of projects. Recently, it worked with the Centre for Urban and Regional Excellence in India to improve the toilet blocks at two and provide rainwater harvesting systems and composting facilities to help them towards zero waste. “Another ongoing project is planting fruit trees to celebrate our Indian employees’ work anniversaries. It’s carbon capture and boosts local farmers’ incomes,” she says.

The final bucket takes in any other business. “We wanted to keep some flexibility so we could support or donate to events as required. For example, the Ukraine war or the recent earthquake in Morocco,” she explains.

In addition to financial support, OakNorth encourages its staff to use two working days a year helping causes close to their own hearts. “This is our 1 + 1% programme. Staff put in a request perhaps to fundraise or volunteer. One sailed across the Atlantic and used their two days as part of that,” she says.

The programme has only been running since the start of this year and so far about 18 per cent of the workforce has taken part. Kristensen is keen to expand this, but admits to not knowing what would be an appropriate proportion. “There’s an awareness we need to build up within the organisation and not everyone thinks they can spare the time. I really want to change that,” she says.

One way she is building awareness is by asking those who have become involved to spend five minutes on what she calls the “weekly all-hands call” to tell colleagues about it. “It just reminds people that we’ve got this benefit and they can take advantage of it.”

Of course, rising participation rates will not only mean greater social benefits, but will also reinforce OakNorth’s social-good credentials. This, according to Kristensen, along with its other purposeful activities, will help it continue to grow.

“[A large] number of candidates [for jobs here] ask about what we’re doing as a company for local communities, the environment and society as a whole. They want to work for a company that’s doing the right thing,” she says. “It also speaks to the sort of investors we want to attract. We’ve raised over $1 billion from different investors over time and we want them to be aligned with our values and vice versa.” In addition, customers often ask before they open accounts about whether OakNorth screens out certain sectors or about its social programmes.

However, she admits that to date, OakNorth hasn’t included its social purpose achievements in any marketing. “We make sure our talent team is fully briefed about everything we’re doing in this area, from our net-zero targets to our 1 + 1% commitment, but [marketing] is something we should do. It will help differentiate us, but also help us find more charities we can work with, more initiatives we can support. So as the 1 per cent pot grows, we can spread it further,” she says.

That certainly sounds like a virtuous circle.

• This article was created as part of a collaboration with Comms for Good, a corporate social responsibility initiative founded by FirstWord producer Kate Bolton