Atom Bank will get boosts for loan book, competitive edge with £500M Landbay deal

The news: Atom Bank struck a £500 million ($641.2 million) partnership with mortgage originator Landbay, per AltFi.

• For context, Landbay is a peer-to-peer lending service, per its website.

The partnership calls for the UK neobank to use its deposits to fund prime residential buy-to-let mortgages handled by Landbay—a type of home loan for landlords who want to rent out their properties.

More on this: The collaboration is designed to help the neobank grow its loan book.

• Atom Bank CFO David McCarthy pointed out that deals with companies like Landbay will help it reach new markets.
• Meanwhile, Landbay CEO John Goodall said that the partnership will help it grow its presence in the buy-to-let market, and enhance what it offers to landlords.

The bigger picture: Working with Landbay is Atom Bank’s latest in a slew of major announcements this year, which have included:

• Surpassing the £3 billion level ($3.85 billion) for residential mortgage completions in July since its 2016 founding.
• Getting to the £1 billion mark ($1.28 billion) for small and medium-sized business (SMB) lending.
• Striking a £300 million ($384.7 million) partnership in June 2021 with Funding Circle for business lending growth.

The opportunity: Atom Bank’s Landbay deal will help it scale its loan book even faster.

The neobank will enhance its competitive advantage versus prominent UK challengers: it plays in the less-crowded mortgage space, unlike Revolut, Starling, and Monzo. If scaling in mortgages proves successful, it would combine its first-mover advantage with a sophisticated way of originating mortgages to build a moat.