Bank of England Study Finds Fintech Partnerships Boost Cheaper SME Lending in UK Regions

The Bank of England has conducted research on digital partnerships between major UK banks and fintech firms, revealing that they contribute to cheaper SME lending in UK regions.

The study found that a one-unit increase in 'fintech intensity' among the top five banks increases SME loan volumes by 5.4% and cuts origination spreads by 21.1%.

The analysis tracked 50 bank-fintech partnerships between 2011 and 2024, with 12 focused on SME lending. These partnerships drove regionally distributed credit gains, reducing gaps between urban and rural SME borrowers.

However, the study noted that fintech-driven lending expansion had limited impact on riskier firms, as collateral and financial history remain critical barriers for younger and asset-light SMEs.