The SME market (small to medium sized enterprises) has long been a difficult market to serve for the financial services industry. The FinTech movement has spawned quite a few innovative, digital-first entrants aimed at serving this market – traditionally underserved and under-supported by traditional, incumbent banks.
However, 2020 brought further difficulties to this sector in the form of the global COVID-19 pandemic. Speaking to The Banker earlier this year, Allica Bank chief executive Richard Davies said: “The surge in demand has been driven by small and medium-sized enterprises (SMEs), particularly outside London, that have found it difficult to secure funding during the crisis. SMEs’ supply of finance has been very badly damaged by COVID-19 outside of the government schemes.”
Many firms in the UK have moved fast to be able to offer the UK government-backed Coronavirus Business Interruption Loan Scheme, which has made billions of pounds in loans available to SMEs. Most notably of the challenger banks, Starling, which pivoted quickly at the start of the pandemic to be able to offer the loans.
The impact of the pandemic on SMEs has been acute. According to research conducted by Starling and the Great British Entrepreneur Awards & Community (GBEA):
- Two thirds (68%) of SMEs believe they will return to pre-COVID levels as early as 2021
- Two in five (39%) firms have changed their business line to adapt to the crisis
- SMEs have also faced huge personal sacrifices, with a third (30%) of owners ploughing their personal funds into their businesses to keep them afloat
- Two thirds (66%) believe their mental health has suffered as a result of the pandemic impacting their business
Aside from the pandemic – advances in digital technology have created radical changes in how firms can offer capital and loans to SMEs in a greatly reduced time frame and tailored to each individual business’ needs. Because of further advances in technology, lenders now have the tools to create a bespoke borrower experience, whilst slashing delinquency rates and boosting their income streams. Real-time loan spend data can now allow lenders to truly understand borrowers, enhance credit risk decision making and deliver personalised lending solutions. A funds-to-wallet approach now means lenders can meet the needs of an SME borrower in a quicker, more personalised and efficient way. According to Shaun O’Keeffe, head of marketing at Marqeta, “This is an incredible opportunity to bridge the gap between lending and payments.”
All of this will be discussed at our upcoming Virtual Lending 3.0 event on February 24th, 2021.
Anne Boden, CEO of Starling will sit down for a special Fireside chat to talk about the role of banks in lending and the importance of supporting the SME Market.
Ian Johnson, MD (Europe), Marqeta will open up the event with a keynote looking at how the industry can bridge the gap between payments and lending, taking advantage of payments rails to offer modern lending products to merchants and consumers.
Stuart Doignie, MD – FinTech Strategy and Commercialisation, Shawbrook Bank, Richard Carter, CEO Europe & Asia, Bibby Financial Services, Katrin Herrling, CEO & Co-Founder, Funding Xchange and Simon Cureton, CEO, Funding Options, moderated by Adam Tyler, Executive Chairman of FIBA will look at how SMEs are leveraging Lending 3.0 to thrive and grow.
While Conrad Ford, Chief Product & Strategy Officer, Allica Bank, Alexis Kopylov, CEO, DBT, Matthew Nyong, Vice President – Fintech Warehousing, Silicon Valley Bank and Emily Hogg, Head of Lending & Investment Operations, Innovate UK will take a long look at how lenders can play a part in our economic survival post – global pandemic.
Are you interested in the next generation of lending products, services and technology? Join us to discuss the future of SMEs in the UK and Europe and beyond!
FTT Virtual Lending 3.0 is the only Lending event you will need in 2021.