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The principal finding of the inaugural report of the CFIT Open Finance Coalition was that substantially more lending could be made to small businesses, and significant increases in lending acceptance rates made possible, with the timely provision of more high-quality, reliable data to lenders.
It suggested over 25% of SME loan applicants who had been referred for manual underwriting and would potentially have failed to receive an offer of credit, could justifiably be given access to finance.
There are over 5.5 million SMEs in the UK, and around 30% of these have sought finance during the last three years, according to The British Business Bank. This equates to approximately 1.7 million businesses. Shockingly, not only access to funding difficult, but over 50% of SMEs whose applications are declined do not seek alternative lenders.
On the other side, a key struggle for lenders is limited visibility into a customer’s total financial exposure. With over, lenders often lack a complete picture of outstanding debts, affordability, and liquidity - leading to blind spots in risk assessment.
This presents a huge opportunity for traditional banks, credit, and finance institutions, as well as digital challengers and other alternative lending providers who actively invest in innovative funding strategies.
Demand for finance is growing as businesses seek working capital to assist with rising energy costs, supply chain disruptions, the high costs of wages, and the uncertainty of global trade tariffs. As well as for investment ingrowth and development of new products and services.
The CFIT suggests the benefits of better access to data include:
- Better and quicker risk assessments and application decisioning
- Improved customer experience
- Reduction in financial crime
- Increased proportion of creditworthy applications, and therefore improved supply of credit
A single source of truth of lenders
Whilst there is of course an abundance of data avaliable to funding providers, the challenge is having that data orchestrated, augmented, and validated in a way that drives better and faster funding decisions.
With tightening regulations, lenders need to be able to implement faster, data-driven risk assessments to mitigate risk, improve decision-making and strengthen customer relationships.
A single source of truth means the ability to consolidate and harmonise data - i.e. create a unified source of customer intelligence that is up-to-date, accurate, consistent, and reliable. This facilitates informed funding decision making by providing a complete view of a business, its level of indebtedness, affordability and credit risk, as well as insight into the individuals within it.
The best way to achieve this is via a single data orchestration platform. An augmented and validated ‘intelligence everywhere’ approach that delivers a complete view of a business’s financial situation, including the individuals within it. This empowers better funding decisioning at every stage of the lending lifecycle – from acquisition to application, from funding to retention and growth.
The benefits:
- Task automation, reduction in manual processes, streamlined workflows
- Faster loan processing and approvals smoother, more efficient lending experience
- High loan volumes
- Improved regulatory compliance
- Higher long-term customer value
Best practice examples of data driven lending
Thincats deployed a single platform approach to streamline processes, reduce complexity, accelerate loan completion, and enable faster access to capital for SMEs. As a result, they've achieved a 60% reduction in data entry and manual input time, a saving of 166 minutes per lending journey, along with a better experience for loan applicants.
“The project has delivered significant enhancements to our systems and processes…we have shortened loan completion processes allowing us more time to focus on the deal and improve experience for customers.” Liam Murphy, Head of Change at ThinCats.
Tide sought a new way to balance customer experience with the need to gather and assess as much data and insight on SME customers as possible. Powered by single platform data orchestration,Tide now surfaces actionable insights from multiple data sources – credit scores, Delphi scores, payment data, CCJ history, shareholder data – to qualify applications and assign the right products based on the specific needs of SME customers, whilst limiting lengthy applications processes and delivering a personalised experience. The result has been a 72% increase in the number of loans it processes annually, and a 10-minute average time saving per application. Application forms are now populated in under 2 minutes.
“By employing a more streamlined data strategy we believe we’ve optimised our capabilities moving forward and can remain the largest credit marketplace in the UK.” Thomas Boyd, Head of Partnerships at Tide.
FullCircl can help your business lend smarter
We aggregate, enrich and validate data from the widest possible range of sources to deliver a single source of truth for faster and more accurate lending decision making:
- Build more accurate financial profiles of business customer
- Gain a total market view of indebtedness, affordability and credit risks
- Get a clarity of business ownership and group structure
- Stay ahead of regulatory and compliance risks
- Eliminate onboarding friction
- Accelerate loan application processes
- Continuously monitor customers at every stage of the lending lifecycle for enhanced experiences
Come and talk to us about our SmartBanker, SmartOnboard and how we can help you access all the data and insight you need to take business funding to new level.
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