OakNorth is largely split into two different areas. The first lends to SMEs in the UK with amounts ranging from between £500,000 and £25m. The other is an automation system known as “Credit Intelligence” that helps banks make quicker and more accurate decisions around how likely a loan was to get into trouble.
“The way that commercial banking has been done hasn’t changed whereas retail changed so much,” he says with a smile as his dog, Simba, darts into the picture.
“Small business has changed materially, as soon as you go to commercial banking it’s the same as it was in the nineties and eighties.”
Khosla believes there are thousands of banks in the market for his software, particularly in the US. So much so in fact that he believes the lion’s share of OakNorth’s revenue will eventually come from its American business.
Despite the company’s intense international expansion, another funding round is not on the cards. He insists that the business is “fully-funded” and has been since SoftBank came on board.
In order to keep growing however, more needs to be done to help stimulate innovation in the sector in the UK.
“If you take the challenger bank sector and OakNorth Bank as an example – from a regulatory perspective, we believe we should be treated differently to a new bank that’s only just received a license and is yet to make a profit,” he says.
“At the same time, we also can’t be treated in the same way as a low growth incumbent institution or a systemically important institution which has much bigger regulatory teams and resources.”
The OakNorth chief believes that certain requirements, like regulatory reporting for growth banks, should be simplified. He also says that new requirements should be implemented in a “proportional manner” for new and growing banks, nodding to the requirements put on fintechs around operational resilience.
The Prime Minister’s now-ouster advisor Dominic Cummings had outlined desires for Britain to build trillion dollar tech giants, like the ones found in the US. Khosla is hopeful that the UK can eventually build a tech titan of its own.
“I have no doubt that we have the capability to build global champions in the sector, but there’s a lot of work to be done if we want to build global tech companies like those seen in China and the US,” he says.
He points out that while Britain is great at starting businesses, it starts to fall down when it comes to scaling them.
Khosla himself will face those very challenges as he begins to scale his business into a truly global operation. Given the company’s performance in the midst of a pandemic and its bullishness around Brexit, it might be foolish to bet against him.