Challenger Bank North Winds Down After Unsuccessful Fundraising

Challenger banks hold tremendous potential in the financial technology sector. Their focus on customer-first products and services will often lead to a better user experience. Unfortunately, Bank North is forced to shut down due to insufficient capital to pursue a full banking license. 

Curtain Call For Bank North

There were high expectations for Bank North, a neobank based in Manchester. The company was in the process of raising additional funds to pursue a full banking license. That process would help further put the challenger bank on the UK’s finance radar. However, becoming a fully regulated bank is costly and benefits both the provider and its customers. Pursuing it is never a guarantee of obtaining the license, though. 

Unfortunately for Bank North and its customers, that license remains elusive. The neobank failed to raise sufficient capital within the allotted time frame. Although the outfit has a restricted banking license since August 2021, that only remains valid for so long. Receiving that limited license is a precursor to pursuing a full banking license. Additionally, Bank North raised 24 million GBP in Series A funding in 2021. 

Bank North has a solid track record as a lender for SMEs in the UK. That would always remain Bank North’s primary objective in the market. However, the inability to r ise further funds illustrates widespread fear by investors in investment markets. Several firms have struggled to raise capital in the past few years, and there is no improvement in sight. 

Moreover, the writing was on the wall for Bank North. Earlier, the challenger attempted to launch a savings business for UK customers. Doing so with a restricted banking license is virtually impossible, and the idea never materialized. For now, the challenger bank will look to offload its loan book. Moreover, one-third of its employees will be let go or transferred elsewhere.