How SMBC is partnering with OakNorth to build the commercial bank of the future

Sunil Dayal

August 23, 2021

SMBC has been at the forefront of the digital revolution for the last decade, investing in artificial intelligence and machine learning to best support the needs of its customers. Our Innovation and Fintech team, which I’ve been leading since I arrived at SMBC more than a year ago, aims to identify pain points and growth opportunities within the business and determine how technology can be leveraged to address them.

The Innovation Department, formed a few years ago to strengthen fintech-related efforts across SMBC Group, focuses amongst other things, on pursuing new business models through partnerships with best-in-class products and solutions that answer the evolving needs of its customers. Through active engagement with fintechs and the establishment of innovation and investment centers across the world, SMBC has deployed technology throughout its business in meaningful ways without losing the human touch.

Working together to increase efficiencies
This approach led us to pursue a partnership with, and subsequently a secondary investment in, OakNorth. Several aspects of OakNorth’s software appeal to our team, which has evolved and grown over the years in both depth and breadth of services. To start, we’re particularly interested in those aspects that will help us build efficiencies, automating certain manual processes and updating processes that are not as efficient as we’d like. Through automation, we will enable SMBC team members to spend more time on the parts of their roles that are most rewarding for both their personal development and the business.

We are also excited about the ON Credit Intelligence Suite’s ability to dynamically monitor commercial customers’ credit facilities with us. We’re moving very quickly into a world where data must be real time. If the most relevant data we have on a customer is a year old, that is a problem—both from a credit-risk perspective and from a regulatory perspective. Thus, OakNorth’s ability to provide us with real-time data and analytics on our borrowers is crucial to SMBC’s continued success.

A one-stop shop fintech partner
We have a committee here at SMBC that approves all tech projects, setting criteria around ROI, market leadership, ability to reduce risk, ability to reduce cost, the strategic importance of a project, etc. The more of these elements a project has, the quicker it moves up the list of priorities. With OakNorth, we’re checking pretty much all these boxes. OakNorth’s holistic offering, which covers stress testing, monitoring and credit analysis, means we can work with just one fintech, rather than go through several different ones to develop a process with each and then cobble them together for our purposes.

After several months of deploying OakNorth’s software, SMBC seized the opportunity to invest $30 million in the business via a secondary round. Given all the above and the direction of SMBC, we believe that decision was easy to make.

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About the author

Sunil Dayal

Head of Innovation and Fintech, Americas Division, Sumitomo Mitsui Banking Corporation (SMBC)