Latest FCA sandbox targets SME lending solutions

A new digital sandbox has been launched by the Financial Conduct Authority (FCA) and the City of London Corporation, to explore fintech solutions on a range of issues including business lending.

30 innovative businesses have been chosen to participate in the digital sandbox pilot, including eight companies which are specifically focused on small- and medium-sized enterprise (SME) lending.

These include FIBR, which uses data science to help measure the credit risk of an SME, with a view to allowing the lender to provide a credit decision within two hours; and Sota Signal Analytics, which aims to reduce uncertainty and create greater confidence in a lending counterparty.

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Several open banking solutions are also being trialled within the sandbox, such as Open Banking Reporting, which provides a ‘match-making’ service that allows SMEs to share their accounting data and personalise financial insights with their lenders of their choice. Fellow sandbox participant Fractal Labs uses open banking to create a cashflow forecast in order to help assess the eligibility of SME’s for small working capital loans.

Meanwhile, Untangled Finance uses tokenised assets on a blockchain to securitise SME loans and invoices, while Fluence uses artificial intelligence to interpret and analyse financial applications and claims handling processes in order to automatically interpret new applications and claims.

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Company Watch is using the sandbox to work on a solution to enable finance funding providers to predict and analyse ability of a small business to repay credit within certain time periods. And Unruly aims to offer companies with a holistic real-time view of the financial health of their business in a single interface.

The remaining 22 companies participating in the sandbox will focus on issues such as fraud and scams, and financial vulnerability.

The pilot scheme will run until 5 February 2021, with an independent evaluation process being undertaken by Grant Thornton.

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