The bank opening is an example of the growing momentiume behind so-called proptech as the property market and mortgage sector becomes the latest to be targeted by tech-led startups and challenger institutions.
“As many traditional banks are hampered by poor lending practices from their past and their legacy systems, we are perfectly positioned to help British SMEs take advantage of property opportunities by offering a highly-tailored service for clients that is built around our very experienced regional managers,” said Redwood founder and chief executive Gary Wilkinson.
Redwood Bank, which counts Warrington Borough Council as major stakeholder in parent company Redwood Financial Partners, will specialise in providing loans worth between £50,000 and £1.5m and for terms between 2 to 25 years.
The launch of Redwood Bank comes at the same time as Blend, a startup designed to make the online mortgage process easier, has secured a $100m investment from Silicon Valley investor Greylock, taking its total funding to £160m and its market valuation to $500m.
Blend has also recently struck and an agreement with two US banks, Wells Fargo and US Bancorp, to have its software used as part of the banks’ mortgage application processes as the incumbent lending institutions bid to fight off a swathe of non-bank competitors and startups that have targetted the mortage and lending sector.
Blend CEO and founder Nima Ghamsari said the capital could also be used to grow its staff and explore additional opportunities to use its technology for other lending products and services.
“The opportunity for our technology in the $40 trillion consumer lending market is huge, but the industry won’t change overnight,” Ghamsari wrote. “To realise our goals, we need to continue scaling and bringing together the best talent, partners, and backers to get us to the next level.”