U.K. alternative lender iwoca’s growth could signal ramped up competition between banks and FinTechs, according to new data.
Reports in Forbes on Thursday (April 25) said iwoca provided 3,802 of the 31,014 small business credit lines approved in Q4 2018, according to U.K. Finance analysts. That amounts to 12 percent of all new business overdrafts, and a 2 percent increase from Q3.
More importantly, iwoca’s share of the small business lending market overtook those of both HSBC (which provided 11 percent of the quarter’s business overdrafts) and Santander (which provided 9 percent).
Barclays provided 15 percent, Lloyds provided 20 percent and RBS accounted for 30 percent, reports added.
In an interview with the publication, iwoca Co-Founder and CEO Christoph Reiche pointed to the importance of providing small businesses with access to capital.
“There are the businesses that have less than 10 employees and they have been chronically underfunded and are still today,” he said. “We want to solve that problem and make financing easily accessible, which is how it should be and how you, as the consumer, think it is.”
U.K. Finance data also showed a 50 percent decline in the number of overdrafts offered by traditional lenders to small businesses in the last seven years, which likely contributed to the increase in an alternative lender’s share of the market.
In addition to targeting the credit gap, iwoca’s Reiche said the company is also looking to address other shortcomings that small businesses face with traditional bank lenders, including long application processing times.
“The experience that financial institutions are delivering is poor,” he said, adding that “these small businesses are likely to be sitting outside the risk appetite, meaning that banks have zero incentive to delivering a great service.”
U.K. Finance analysis found iwoca accounted for 19 percent of approved business credit facilities in London during the quarter, and 15 percent of the market in the North West and South East.