" class="no-js "lang="en-US"> EXCLUSIVE: "Growing smarter" - Oxbury Bank in 'The Fintech Magazine'
Thursday, February 09, 2023
Saltedge Report

EXCLUSIVE: “Growing smarter” – Oxbury Bank in ‘The Fintech Magazine’

Two-year-old Oxbury Bank is alone among UK agtechs in having a full banking licence, allowing it to finance digitally literate and data-rich businesses, based on a unique set of environmental metrics. It’s a lonely furrow, but it looks set to be a profitable one 

To all appearances, it doesn’t seem like a propitious moment to be the UK’s first agtech bank. The soaring cost of fertiliser, feed and fuel combined with a messy divorce from the EU that has seen up to £60billion of produce left to rot this year for want of foreign hands to pick it, is hammering farm businesses. But you reap what you sow… and even before its launch on January 29, 2021, Oxbury Bank had been intensively cultivating the technology that would make its lonely furrow highly productive. As it closes its books on only a second full year of trading, signs are that it’s already broken even. In 2023, Oxbury is forecast to turn a profit.

That’s possibly the fastest route to being in the black since OakNorth –also a retail savings and business lending bank – which hit its goal in a remarkable six months. Both were born of a frustration with legacy bank’s attitudes to funding growth businesses, and both have taken a tech-enabled, people-driven approach to breaking the mould. Oxbury puts muddy feet on the ground, while its Cloud-based, API-ready system is busy winning awards. The latest was a British Banking Tech Award for Best Use of IT for SME Lending with Oxbury Farm Credit.

“We use the data to risk assess the farm. If it’s is not on the right [sustainable] trajectory, there is a real risk it will not be able to sell its produce”

Nick Evans, Founder & MD

Described as a ‘unique input finance facility’, it’s a flexible working capital product that allows farmers and growers to buy essential materials through an approved list of suppliers as they need them and settle up when it suits their cash flow. Invoices are automatically uploaded to the bank’s online platform, which is integrated with its suppliers, so customers can review their account in real time, query and pay bills, make repayments on their credit and monitor monthly outgoings. While that’s key to keeping the tractor wheels turning, it’s also important in helping the sector reach another, important, goal – achieving net zero.

According to survey published by NatWest in August, 99 per cent of UK farmers had been hit with above-inflation input costs that had forced them to put climate action on hold. At the same time, an overwhelming majority (88 per cent) were at least somewhat worried about the impact climate change was having on their industry. That led NatWest to announce a £1.25billion lending package for the sector while also ramping up its support around sustainability.

Virgin Money, meanwhile, has also launched a £200million fund to help farmers decarbonise. In its own study, 72 per cent of businesses surveyed wanted banking products tailored towards sustainability; 22 per cent said they’d been asked by customers to provide evidence of carbon emissions. Farmers are right to be worried, says Oxbury Bank MD Nick Evans, because how they manage their business today will materially impact their profitability in the future as customer demands, lenders’ attitudes and environmental regulation becomes stricter around environmental impact. As high street banks in the UK struggle to get to grips with interrogating their legacy loan books in order to meet climate-related financial disclosures, Oxbury set out from the beginning to automatically collect granular data from Cloud-based farm management and other apps, bring that information to the core banking system and attach it to the farm record. Once there, it’s used to not only improve the bank’s risk assessment process but also assist clients in their transition to net zero.

While agriculture itself is responsible for 10 per cent of total greenhouse gas emissions in the UK – mostly nitrous oxide emissions and methane while only accounting for about 1.7 per cent of total CO2 – it’s the farmed landscape’s ability to lock in carbon through soil and woodland sequestration that makes agriculture a key warrior in the fight against global warming. According to a 2019 report from the Intergovernmental Panel on Climate Change, global farmland can capture and store the equivalent of up to 8.6 gigatons of CO2 a year, and the world released around 9 gigatons of it in 2020. Soil carbon is one of a number of indices that Oxbury Bank captures from its client farms. Among several more are biodiversity, climate emissions, energy consumption, and pollution.

“We’re in the process of putting together metrics to benchmark each,” says Evans.. “We use the data to risk assess the farm to make sure we’re happy with its performance now and that we’re going to be happy with it in 15 years’ time, because, if it’s not on the right trajectory, there’s a danger risk it will not be able to sell its produce in the future.

Speaking at the Altfi Green Lending Event in November, where he showcased the platform to Funding Options and Tandem bank, Oxbury co-founder and chief customer and regulatory officer Tim Coates, said it was important to incentivise its current and future customer base to share data with the bank because ‘better information means lower risk’.

“And this is where fintech, I think, is really involved, because that is about quality information data transmission between customer and lender.”

For the forward-thinking company bosses that Evans says the bank has organically managed to attract, data-driven farming is not an alien concept and they are willing to exchange one valuable commodity for another: information for better access to cash. Smart farming needs smart cash, after all, and increasingly so as it moves towards Industry 4.0 A record £1.3billion in agritech deals were signed in the UK in 2021, supporting technologies such as drones and vertical growing systems, that offered solutions to rising input costs, food security and the transition to what’s sometimes called nature-positive farming. Farming is, in all respects, a growth industry, says Evans.

“I thought that in 2018 when we started looking at Oxbury Bank and I’m even more sure now of the opportunities for farmers and growers.”

Most recently, the bank launched Oxbury New Gen specifically to support startup businesses in the agricultural sector whose founders are aged between 18 and 40, addressing what is historically, one of the biggest barriers for new entrants to climb – a lack of access to cash.

The bank funds successful applicants at up to 100 per cent of their cash flow requirements and provides free business and financial support through a national panel of independent advisors. They’ll be drilled with the mantra ‘if you can’t measure it, you can’t manage it’ and will, of necessity, become accustomed to collecting and sharing the environmental data on which Oxbury will base its future lending decisions. In that way, says Evans, it hopes to ensure that there are not just enough farmers for it to keep ploughing its furrow, but that furrow will be the greenest on the planet.


This article was published in The Fintech Magazine Issue 26, Page 18-19

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