How Jonathan Thompson, the founder and CEO of Bank North, aims to fix Britain's financial system

Critics believe the UK’s economy is being stifled by a finance system that is crippled by structural problems. Decision makers are often far removed from small businesses on the coal face, which, it is claimed, leads to sluggish and ill-informed responses to legitimate requests for support.

Jonathan Thompson, the founder and CEO of Bank North, would endorse this bleak message. The system is broken, he argues, and Bank North is here to fix it.

Mr Thompson, who lives in Harrogate, and his fellow founders set out in 2018 with a mission to disrupt the SME (small and medium-sized enterprise) lending market by establishing the first truly regional bank of the modern era.

From its base in Manchester, Bank North is making plans to open a ‘pod’ in Yorkshire in the near future as part of its national expansion. Bank North began lending in December and has reported strong demand for its decentralised model where decisions are taken locally.

“Over the last 10 years the UK banking market has been focused on reducing costs and dealing with the structural challenges they face,” said Mr Thompson. “They are facing significant challenges from digital banks which have been nibbling away at their traditional business models.

“The SME banking in the regions has suffered as costs have been taken out of the business and local and regional offices have been replaced with contact centres.

“Banks have been centralising every aspect of their lending to businesses. Decisions are being made by teams in London who appear faceless to people in the regions. Bank North is focused on these UK regions.”

It has launched a banking pod in Manchester and plans to scale up across the UK as demand for its services grows.

Mr Thompson said: “We are what I would term a hybrid – we benefit from cloud-native banking technology at the heart of our business, but combine this with the human touch in our unique regional pod model, where our expert teams structure, decision and deliver lending for business in each of the regions we operate.”

“We have got very clean technology at the heart of the business,” he added. “One example of this is our partnership with Tru Narrative (which helps detect fraud and identify risk), we can carry out relevant checks on potential customers in 90 seconds.

“We make decisions in the regions in which we operate, and by doing this, we can make better informed, and faster, risk decisions.”

Entrepreneurs of a certain age have fond memories of the days when lending decisions were made by the local bank manager after a single meeting.

Mr Thompson recalled: “My father worked for Barclays in Leeds. In those days, business was done with a face-to-face meeting and a handshake. Centralised decision making has created barriers between the banks and their business customers. We are here to remove those barriers. We have raised £34m since 2018 in various funding rounds.”

Bank North counts LHV Group, LHV Asset Management, Skipton Building Society, Channel 4 Ventures and the Greater Manchester Combined Authority as major investors.

“We are now in the process of securing a £50m series B fundraising that will allow us to scale up the pod model,” said Mr Thompson. “This is being supported by our existing investors, and we are opening discussions with new investors now.

“We plan to have a pod in Yorkshire, at a location which is still to be decided, by the third quarter of this year,” he added.

“We also aim to have pods in the Midlands and West London later this year. We then aim to go from four pods to eight as we build a business with an authentic regional presence. A pod will not be like a bank branch, it will be a 2,500 sq ft office in a central location with a team of around 15 people in each pod.”

“We will leverage our regional insights which is completely lacking in the UK market,” he added.

He believes the North – and the UK’s regions – must seize the initiative to shape their own destiny. There is no substitute for local knowledge.

“The UK will not level up by waiting for Westminster to tell us what to do,” he said. “We apply human judgements and would describe ourselves as ‘sector agnostic’. We don’t cut corners from a risk perspective,’’ he said.

These are hard times for many firms as they face rising inflation and supply chain disruption.

“Britain’s SMEs are facing very significant headwinds,” he said. “But we are an SME ourselves and SMEs are a resilient bunch. We will plan and navigate around headwinds.”

Bank North, which aims to execute loans much faster than any high street bank, believes it has the agility to help Yorkshire firms navigate the most troubled economic waters.

Mr Thompson added: “The North is on a journey and we have designed the bank to be perfectly suited to supporting its businesses as they continue to grow and scale.”

Jonathan Thompson is the founder, executive director and CEO of Bank North.

He is a professionally qualified banker with 26 years’ experience. He has also worked in corporate finance and capital advisory as a director for Deloitte.

The majority of his career has been spent in business, commercial and corporate banking and prior to founding Bank North, he was with one of the UK’s challenger banks, Santander, where he was a divisional managing director in its business and commercial bank.

Bank North describes itself as a fintech-enabled bank, combining customised technology with the trust of face-to-face banking.