CMA backs Challenge Prize to deliver market-led comparison tools for SME finance
7 March 2016
- Building on UK FinTech leadership, CMA backs Nesta SME Banking Challenge Prize to unlock SME lending
- Government- and industry-led initiatives have had little impact, as has traditional price comparison
Today the Competition & Markets Authority (CMA) published new findings on the role of comparison sites for small and medium-sized enterprises (SMEs), choosing to support an SME Banking Challenge Prize run by innovation charity Nesta to unlock SME lending using open data from banks.
Conrad Ford, Chief Executive of Funding Options, the UK’s leading online marketplace for SME finance, comments:
“We are delighted that the CMA has backed a Challenge Prize to foster innovative market-led solutions to unlocking vital SME finance. Building on the UK’s leadership in financial technology (FinTech), we wholeheartedly agree with the CMA’s belief that competition rather than regulatory design will best unlock SME finance, a £20 billion prize for the UK economy.
“The CMA has also acknowledged that solving the SME finance problem will take more than basic price comparison tools.
“For SMEs that can access bank loans, finance is already affordable due to record low interest rates. Indeed, most alternative business finance providers cannot compete with major banks on price, as their funding costs are higher.
“The unique challenge of SME finance is not one of cost, which is why the major consumer price comparison sites have yet to develop credible SME loan offerings. Rather the key SME finance challenge is one of availability, where a one-size-fits-all lending approach by the major banks leaves many SMEs stranded.
“Just as the internet revolutionised consumer financial services, it will do so for SME finance, but only through sophisticated tools to demystify the complex alternative business finance market.”
Funding Options explains that unlocking SME finance is a huge economic prize for UK Plc, with a recent report by Cambridge University’s Centre for Alternative Finance and GLI finding £20bn is lost each year through lack of alternative finance awareness. Funding Options welcomes the prominence that the CMA has today given to specialist SME finance comparison sites, and looks forward to playing a central role in helping hundreds of thousands of underserved firms through its market-leading solution.
Funding Options’ formal response to the CMA’s recent working paper on the role of comparison sites in SME finance is available here.