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OakNorth Bank strikes deal with Shieldpay to launch digital escrow accounts for borrowers

[Article originally featured in Altfi

OakNorth Bank claims the service is an "industry-first offering".

Small business bank OakNorth Bank has struck a deal with payments company Shieldpay, launching digital escrow accounts for borrowers.

OakNorth Bank claims the service is an "industry-first offering", allowing OakNorth Bank to hold borrowers' funds securely in Shieldpay's digital escrow facility and only release funds when all parties are in agreement.

"This is the first time a commercial lender is marrying up both real-time disbursement of payments with escrow functionality giving certainty and multi-party sign off of payment recipients. Eliminating fraud risk," a spokesperson for OakNorth Bank said.

The partnership- which is the first between the two businesses- will mean that the bank borrowers can keep track of the capital within the business. It will also provide the bank with analytics and insights into borrowers' cash flows.

Amir Nooriala, Chief Strategy Officer, OakNorth Bank, said: “This latest partnership is another example of two leading fintechs coming together to provide a better experience for the customer. This will be particularly useful for our property developer clients where there are often numerous parties involved in a project – architects, project managers, contractors, sub-contractors, designers, etc – and it can be challenging keeping track of all funds and ensuring that all parties are being paid the right amount at the right time.”

Peter Janes, CEO, founder, Shieldpay, said: “The Shieldpay solution has found a perfect home inside of the OakNorth ecosystem. The OakNorth offering is truly innovative and coupled with the payment security and risk management that Shieldpay offers, this creates a product that is unrivaled in the market."

The partnership builds upon OakNorth Bank and Shieldpay's integration with ClearBank.

The spokesman said it was "exploring other developments with Shieldpay".

Ealier this year, OakNorth Bank, which was founded in September 2015, secured $440m (£354m) from form Softban's Vision Fund.

The bank has also recently partnered with online savings and investments paltform Smarterly to launch a range of ISAs.