Commercial finance at a critical juncture

After a period of continued geopolitical uncertainty, economic insecurity, the challenges of intense technological change and disruption, in addition to ongoing regulatory developments, the commercial finance industry stands at a critical juncture – from an economic, political and regulatory perspective.

While inflation may be ebbing away and with it upwards pressure on interest rates, there is still significant corporate financial distress in the economy, with many longer-term challenges around productivity, skills and investment remaining. Indeed, with corporate insolvencies reaching their highest level in 2023, there is speculation as to how this trend will develop going forward. While many small and medium-sized enterprises (SMEs) continue to show businesses resilience through their capacity for adaptation and reinvention, the commercial finance industry must consider how best it can continue to support business rescue.

Looking beyond the economy, politics, both home and abroad, also poses important questions for lenders’ risk appetite. Globally more voters than ever in history will head to elections this year, notable examples include elections due in the UK, US, EU and across Asia Pacific. All the while conflicts continue in Ukraine and the Middle East. Such geopolitical unpredictably and economic volatility means the UK’s business and trading environment sits in a fragile place.??

In recent months, we have seen increasing stakeholder interest in commercial finance and the lending landscape at large. From the Treasury Select Committee’s review into SME finance, to stakeholder interest in personal guarantees, and political interest in bank account closures, the industry’s role in supporting businesses across the UK has been put under the spotlight.?

The regulatory and legislative landscape, meanwhile, looks set to remain as dynamic and complex as ever. Consumer Duty, which is still being embedded, is expected to bring about a seismic shift in regulated SME lending and banking.? Further changes to the regulation of SME banking and finance are expected with forthcoming changes to the Consumer Credit Act and the Payment Services Regulations.??

Elsewhere, ever-changing technology continues to redefine and disrupt the industry. Lenders and small businesses alike must consider what developments in data, digital money, open banking and artificial intelligence mean for them. What are the uses of data in credit decisioning and how could they be influenced by Open Finance? What will the advent of digital money and AI mean for SME banking and finance???

These wide ranging and, at times, existential questions for the industry mean collaboration between stakeholders has never been more important; to uphold a conducive environment for business lending, leveraging technology and responsible practices to promote sustainable economic growth.??

The UK Finance Commerical Finance Conference , taking place on 14 May 2024 at EY, will bring together expert speakers from the commercial finance industry, fintechs, policymakers, regulators, business groups and other experts to address these important issues.

We are particularly pleased to welcome the Minister of State in the Department for Business and Trade, Kevin Hollinrake MP , Shadow Investment and Small Business Minister, Rushanara A. , Sheldon Mills , Executive Director, Consumers & Competition at the Financial Conduct Authority , Alan Beattie, Senior Trade Writer at the Financial Times, Christopher Woolard CBE CBE, Partner at EY and many more.

We hope you can join us for this flagship event. For further information and to register your place to avoid disappointment, please visit our website .

Lily Ellis is an Analyst in the Commercial Finance team at UK Finance.