Big banks have dealt a heavy blow to the fintech industry by blocking proposals to let alternative lenders gain access to crucial funding from the Bank of England.
An internal inquiry by the Treasury last month examined “opening the Bank’s balance sheet” to fintech start-ups lending through the emergency bounce back loan scheme (BBLS), according to sources involved in the process.
However, the plans were rejected because of “issues around the commercial challenges” raised by respondents from the high street banks, including RBS, Lloyds, HSBC and Barclays. One source said the banks “could not make it work” in terms of profitability.
The move will hamper the ability of challenger banks to lend to small firms at a time when they are borrowing at unprecedented levels