The alternative lending industry introduced a new threat to traditional banks, but the conversation has since turned to how financial institutions can collaborate with FinTech disruptors in an effort to progress the lending industry and stay on top of digital trends.
But, in a new interview with U.K. publication Management Today, FUNDING XCHANGE Founder Katrin Herrling suggests that banks are still stressed about keeping on their toes.
According to Herrling, that pressure is what causes banks to partner with alternative lending players, like FUNDING XCHANGE.
“The big guys are doing this because they feel they’re becoming irrelevant or are irrelevant in the SME space,” she said. “If you think KPMG, you think big corporate.”
She added that alternative finance companies can help businesses refresh their image in the lending space, especially among small and medium-sized enterprise customers.
FUNDING XCHANGE first announced its partnership with KPMG earlier this year, adding to the list of various types of lenders on the digital platform competing for business lending deals.
SME finance makes up about one-fifth of the alternative lending industry in the U.K. right now, according to reports, but Herrling said she anticipates growth on that platform. That’s because, while banks want to stay relevant among SMEs, they also know that, unless a loan application is for at least £1 million, banks will not see enough profit after the costs associated with audits and risk assessments.