Fintechs call for government support for non-bank SME lending
Fintechs have called for the government and regulators to provide more support for the sector to aid small- and medium-sized enterprise (SME) lending after the government lending schemes come to an end.
Speaking on a panel at UK Fintech Week, Ross Hunter, head of strategy at alternative lender Iwoca, said the government lending schemes were “crucial to bringing businesses” through the crisis but will recede over time and support is needed to ensure the market is competitive.
He said that the Bank of England, regulators and government need to support a level playing field between fintechs and non-bank lenders and big banks which are still very dominant.
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“We participated in schemes to help business and it helped our business,” said Hunter.
“We need continued support but a competitive market. Large banks still have huge dominance in SME lending. We’re really pushing hard to break that dominance, but it will take time…
“It’s also incumbent on fintechs investing in tech, building machine learning and proving their model.
“All those investors coming into government lending schemes when they see the results of our lending and can see we can predict and extend lending to many more businesses, that is the proof of the pudding and what will take us to the next level.”
Oliver Prill, chief executive of Tide – a fintech which provides banking services to SMEs – said that the UK has a track record of doing things that have made an impact, such as open banking, which is now used by 11 per cent of UK SMEs.
He added that now the UK needs to boldly move forward with new ideas, such as turning the Bank of England from a central bank of banks to a central bank of the financial system and turning open banking into a commercial open finance architecture.
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“We would argue the government needs to find the next generation of change, the Kalifa Review was very good, there was loads of good ideas,” he said.
“I would say it’s more important to take one or two of those and do those boldly just like the UK was very bold with the original move to open banking.
“We need to find the next one or two rather than having yet another review or article or statement of commitment and I would say it’s more important to get going boldly on them and it would help the fintech sector more than continued debate.”
Harry Powell, director of presales at cloud banking software firm nCino, said that businesses have moved from a survive mentality to a thrive mentality.
He said that SMEs in the fintech sector now require intervention that supports innovation.
“I think they need to work with SMEs in the fintech sector to introduce regulation that fosters innovation and growth but also makes sure the consumer or SME is protected at the end of the day and part of that is reducing barriers to entry,” Powell said.
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