Fintechs are winning SME business – how can they keep it?

We were struck by recent data from RFI Global, amongst other sources, showing that half of UK SMEs now use fintech providers for their business banking needs, up from just a third five years ago.¹ That’s a pretty significant shift. It suggests SMEs are actively moving away from legacy systems and towards more agile, tech-led challengers which promise tailored insights, intuitive apps and a better overall experience.

It’s a great story of growth, but it’s not without its challenges. As fintechs scale, they’re juggling product innovation, customer acquisition and investor expectations, all while operating in a tightly regulated and fast-moving space. Recent FCA fines issued to fintechs and challengers, particularly around AML failings, are a useful reminder of how easy it is for governance and compliance frameworks to fall behind.

One area we’re seeing come under increasing pressure is fraud prevention, particularly Authorised Push Payment (APP) fraud, which continues to rise across the UK and is an area of focus for increased customer protection, with mandatory reimbursement for victims on the rise. SMEs are being targeted by increasingly sophisticated scams, and with fintechs now often acting as the first line of defence, the stakes are high. What’s interesting here is that fraud risk isn’t just about systems and controls — it’s also about reputation.

On that note, we were also interested to see the recent analysis from The Banker and Kantar,² which highlights that the banks predicted to grow fastest aren’t necessarily the biggest — they’re the ones that build trust through transparency, responsiveness and customer-centric innovation. Fintechs are well-positioned to lead this shift, but sustaining that trust means embedding governance, compliance and risk management into the business model — not just as a “tick-box” regulatory requirement, but appreciating it as an important part of a wider strategy to drive further growth.

At Burges Salmon, we work with fintechs and challenger banks to help them navigate these challenges with confidence. Please contact us if you’d like to hear more.

[1] Fintechs Gain Ground as UK SMEs Rethink Banking Relationships – RFI Global - Fintechs Gain Ground as UK SMEs Rethink Banking Relationships
[2] On brand: the 50 fastest growing global banks – The Banker - On brand: the 50 fastest growing global banks - The Banker