ONE OF Europe’s largest business lenders says the fintech industry must be strengthened to support SMEs after the Bounce Back Loan scheme closes at the end of the year.
iwoka CEO Christoph Rieche believes smaller businesses already struggled to access finance from large banks before the scheme was introduced.
With over one million firms approved for a loan so far, the scheme should “serve as a wake-up call for everyone in the finance industry”, Rieche says. Demand from SMEs had not been met by high street banks because of their risk appetite, he added.
The iwoca CEO believes that fintechs can help to fill the funding gap, but for the industry’s full potential to be realised, a number of key issues should be addressed
Non-bank lenders need the support of regulators to access capital on competitive terms — as large banks can, and there should be a greater level of industry co-operation through the Bank Referral Scheme so businesses can reach out to a range of lenders.
Rieche says the finance industry, business groups and government must promote the clear benefits of Open Banking and build trust.
“The launch of the Bounce Back Loan scheme was a watershed moment for hundreds of thousands of SMEs across the country,” he said. “However, if smaller businesses are going to be able to access the finance they need after the scheme ends, then fintechs need to be given a greater opportunity to do what they do best.
“The Covid-19 pandemic has exposed the cracks within the ecosystem of small business support. Bounce Back Loans managed to paper over these, but we now have an opportunity to fully address these weaknesses.”