Driving sustainable change through responsible lending

Our second FinTech event this year, held in conjunction with the FSF on Tuesday 13 April, focused on the rise of responsible lending, just as the fs sector answers the call for a green led recovery and with the Government CIBLS and BBLS loan schemes having just ended on 31 March [1].

With thanks to our panel, whose companies are at the forefront of the move towards responsible lending, providing a variety of new lending options that fuse tech with a more purposeful agenda, that puts inclusion, community, and climate at the heart of their approval criteria:

• Stacy Clementson, Head of Credit & Underwriting, Fleximize, a multi-award-winning digital business lender, providing flexible funding options tailored to business' unique needs, voted Best Business Finance Provider 2020 for the second time at the British Bank Awards
• Aneesh Varma, CEO & Founder, Aire, a new type of credit bureau, providing lenders with the most useful, up to date insight about an individual’s financial situation to help them access credit they deserve.
• Chris Gardner, COO & Founder, Atelier Capital Partners, a bespoke short-term lending solution for professional property investors.
• Andrea Reynolds, CEO & Founder, Swoop. Swoop is a business funding and savings platform enabling businesses to discover the right funding solutions across loans, equity and grants, and to identify and easily make savings - all in one fell swoop

Discussion covered the definition of responsible lending for each panellist and the benefits; who’s driving the agenda – the business purpose; customer demand as well as legislation push that is now kicking in [2].

We turned to how to measure this increased focus on responsible lending in your business where transparency is key. The panel mooted that much of the data already exists within the business and the starting point is to leverage what you have. And with momentum building towards COP 26 in Glasgow in November, we need the private SMEs to start adopting the ESG lens as they are the engine of UK plc.

Talking about where the lending market is heading and what’s going to make it sustainable, lasting change, the panel highlighted how legislation is often the key driver. However, legislation is answering the demand for more responsible lending, particularly from the larger investor and pension fund audience. Whilst the new technology available, including open banking, is enabling the creation of more holistic profiles that allow affordable lending to become the norm.

Considering the forthcoming FinTech week at the end of the month, the panel were optimistic about the points raised in the Kalifa review – particularly around tech visas to access talent – to help UK fintech’s to scale from the UK rather than having to go abroad.

Ultimately the panel agreed that the lens of ESG is here to stay and will only become more mainstream. New challenges are around how to understand the risks with some of the technology that is allowing for a cleaner build back, such modular construction; solar panels and geo thermal heating sources in property building. The positives of taking a more responsible lens are enormous, creating greater pride internally, as employees find working on projects that have wider benefits, to society and the plant, more rewarding.

Many thanks again to our panel for their insight and candour.

If you’d like to listen to the event, please click here

References

1. HM Treasury stats on the CIBLS and BBLS loan schemes put into context the scale of the need. The HM Treasury Business Loan Statistics figures to 21 March 2021, show that the CIBLS scheme has loaned £23.28bn to 98, 344 businesses, out of 233,247 applications, whilst the BBLS scheme has loaned £46.53bn, to 1,531, 095 businesses, out of 2,056,587 no. of applications.
2. MiFID II’s Level I for advisors is now in effect, and the majority of the hard preparation for banks and wealth managers to meet the technical and reporting requirements of Level 2, needs to be completed this year.