Open Finance Could Unlock £5bn in SME Finance: Inside Innovate Finance's "Force for Good" Report

Fintech challenger banks and non-bank lenders now provide 68% of SME lending in the UK, according to a new report from Innovate Finance. That single figure, drawn from the trade body's FinTech as a Force for Good report published in September 2026, says as much about how far alternative finance has come as any industry commentary could. But the more consequential finding in the report isn't about where SME lending stands today — it's about what's holding back the next stage of growth.

Open Finance is the next step beyond Open Banking: it extends consent-based data sharing beyond current accounts into savings, investments, pensions, mortgages and SME finance, giving lenders a fuller view of affordability and risk. Innovate Finance, the industry body representing the UK's fintech sector, released the report ahead of its sixth annual FinTech as a Force for Good Forum on 8 October 2026 and argues that faster progress here could unlock an estimated £5bn a year in SME finance through quicker, more accurate credit decisions. For commercial lenders, alternative finance providers, brokers, accountants and UK SMEs looking for funding, that has direct implications for how deals are assessed, placed and approved. This article looks at Open Finance through the lens of SME lending: fintech's role in commercial finance, AI-driven credit risk assessment, the policy case for wider data sharing, and what it means for the next generation of commercial lending platforms.

The headline number — fintech's grip on SME lending

In her foreword to the report, Innovate Finance CEO Janine Hirt writes that "today, FinTech challenger banks and non-bank lenders provide 68% of SME lending, helping businesses invest, create jobs and grow in communities throughout the country." The same figure reappears in the report's "Powering the Economy" section, where it's framed as evidence of FinTech's shift from disruptor to dominant channel.

It's worth noting that Innovate Finance doesn't publish a detailed methodology alongside the 68% figure in the report, and independent trade coverage has flagged this as a gap worth scrutiny — so it's best read as Innovate Finance's own reported figure rather than an independently verified statistic. That said, the direction of travel is corroborated by the report's supporting evidence:

• OakNorth Bank, operating out of Manchester, has lent over £6bn to property developers, investors and SME housebuilders, directly supporting more than 61,000 new homes — the majority affordable or social housing.
• GoCardless research cited in the report finds automated billing cuts SME financial admin by 59%.
• Allica Bank research from June 2026, also cited, argues that established SMEs "hold the key to UK growth but are being overlooked" by parts of the traditional lending market.
• FinTech firms now support more than 20,000 jobs in the North of England alone — part of the report's broader case that this growth isn't confined to London and the South East.

Why cash flow matters for brokers specifically

For brokers, a 68% non-bank lending share isn't news in the sense of being surprising — it's confirmation of a shift most of the market has already priced in. What it does do is strengthen the case for multi-lender, multi-asset-class platforms over single-relationship banking. If two-thirds of SME lending now sits with challenger banks and non-bank lenders, a broker's ability to place a deal correctly depends on visibility across that fragmented market — invoice discounting, asset finance, bridging, commercial mortgages and asset-based lending each have their own specialist lender pools, and no single high-street relationship covers that range.

The report's real headline — Open Finance and the £5bn SME finance gap

The 68% figure is the number that will get quoted. The more useful number, for anyone thinking about where the market goes next, is this one: the Centre for Finance, Innovation and Technology (CFIT) estimates that Open Finance could unlock an estimated £5bn per annum in SME finance, through financial health tools that could reduce SME loan declines by 50%.

That's a specific, third-party-sourced estimate — not Innovate Finance's own claim — and it sits at the centre of the report's first and most developed policy chapter, "Unlock AI and agentic finance through Smart Data."

Open Finance extends the data-sharing model that Open Banking established for current accounts across the rest of financial services — savings, investments, pensions, mortgages and SME finance — by connecting broader financial information, including transaction history and account balances, through Open Finance APIs across financial institutions, customer data, and other data sources. The report notes that Open Banking already has meaningful reach: over 11 million users benefit from it in the UK, which marks significant progress rather than an early-stage experiment. That helps explain how open banking underpins how open finance works, giving a wider range of providers access to support more tailored financial products and improve competition through embedded tools from newer fintechs. Open Finance is framed as the natural next step built on that adoption base, rather than a speculative new initiative, and a driver of financial innovation. The FCA estimates it could generate £7.4 billion annually for the UK economy.

What better open banking data-sharing means for credit decisions

The report is explicit about the underwriting implications. Among the benefits it lists for AI and Smart Data in financial services is the ability to "increase small firms' access to finance by enabling more accurate, faster and tailored credit risk assessments that can properly assess their financial situation and find the best products," and in practice that means a small business can share live data with lenders for faster credit applications and loan applications.

That richer view also supports real time insights into a business's financial health, including trading history and supplier payments, rather than relying only on static data sources — the same mechanisms underpin how open banking is transforming SME lending through API-based data sharing.

In practical terms, that's a case for richer, real-time financial data feeding into credit assessment and giving lenders a more comprehensive view of the applicant's position — the kind of shift that would matter most in asset classes where underwriting already leans on current financial position rather than purely historical accounts, such as invoice discounting and asset-based lending. Faster, more accurate data access means faster answers for SMEs and fewer declines driven by an incomplete picture rather than genuine credit risk — which is precisely the gap CFIT's £5bn estimate is pointing at. Real-time transaction data can deliver £570 million annually in lender benefits, and over 750,000 small businesses already benefit from real-time cash flow insights for better outcomes.

Why the report says the UK is moving too slowly

Having made the case for Open Finance, the report is pointed about the pace of UK policy. The CMA confirmed open banking's final Roadmap completion in September 2024, showing the UK has already met a major regulatory requirement in that area. The Data (Use and Access) Bill is intended to support new smart data schemes beyond banking, extending benefits to other sectors for consumers and businesses. It argues the FCA's current Open Finance "roadmap" is too slow relative to the speed of AI development and, in more detail, says SME lending is one of the FCA's priority areas even though progress still lags; it also describes the Treasury's plan to consult on Open Finance in 2027 as "too late."

FCA chief executive Nikhil Rathi is quoted making the broader case for urgency: "If we are serious about being a leading AI economy, financial services have to sit at the heart of our approach. Only financial services can provide the investment, infrastructure, and trust that will accelerate AI adoption across the economy." The report also cites the FCA's Sheldon Mills, from the Mills Review into AI in financial services: "AI offers a once-in-a-generation chance to close the information asymmetries and frictions that have long left people making poor financial decisions."

Read together, the report's argument is that Open Finance isn't just a data-sharing initiative in its own right — it's treated as the foundation that AI-enabled lending and advice tools need in order to work safely and at scale. Without it, the report argues, AI in financial services is "constrained by fragmented data, a lack of certainty in its veracity, limited portability and growing concentration of power among a small number of large data holders" — exactly the kind of challenges industry platforms supporting the FCA's SME lending vision are trying to tackle through verified data and streamlined workflows. The same pressure is shaping smart data schemes more broadly, and the European Commission published a draft open finance regulation on 28 June 2023, underlining that the UK's financial industry sits within a wider international policy context.

The report's policy asks — British Business Bank and what to watch for

The report sets out three concrete actions it wants delivered within two years:

1. HM Treasury to commit to Open Finance in three priority areas by the end of 2026 — AI-enabled financial guidance, savings and investments, and SME finance specifically — introducing the secondary legislation needed and tasking the FCA with bringing forward a regulatory framework. The report notes that use cases and proof of concepts already exist in these areas, arguing the sector should move swiftly to implementation, with mortgages and insurance to follow. That framework also needs clear consent mechanisms for customer data sharing across a broader range of financial services.
2. FCA advice and guidance rules updated, including debt advice, so firms can deploy AI-enabled support tools with greater clarity and confidence while maintaining consumer protection.
3. Smart Data, Open Finance and AI policy aligned across Whitehall, rather than treated as separate agendas.

Open finance APIs play a crucial role by safely integrating financial products and banking services across providers, and platforms that already align with the FCA's open finance vision for SME lending show how this can work in practice.

Policy makers also need to address privacy, data misuse, and the risk that digitally excluded users may be less able to make informed decisions.

This SME finance and Open Finance push is one of six policy areas the report covers — the others address fraud prevention, a Sterling stablecoin ecosystem, digital verification, international expansion for UK fintech, and talent and investment. Worth knowing the report doesn't stop at Open Finance, but for a lending and broking audience, this is the chapter with the most direct bearing on day-to-day underwriting, and those safeguards matter if the model is to empower consumers with greater control rather than just accelerate innovation.

What this means for our network of brokers and lenders

For brokers and lenders working in commercial finance, the direction of travel here is worth watching closely in the sme market, especially for small and medium sized firms and sole traders, and for lenders considering commercial lending software that can automate pre-qualified deal flow. Faster, data-driven credit decisions benefit both sides of a transaction — lenders get clearer risk visibility without relying solely on backward-looking accounts, and viable businesses can access working capital and other lending products more quickly, including emergency business loans for sudden cash flow shocks when they need to manage debt or are dealing with temporary financial difficulty. Richer data can also support a wider range of business finance needs, from invoice finance to manage cash flow to asset finance, rather than only standard loans.

A multi-lender, multi-asset-class marketplace platform for commercial finance brokers is structurally well placed to benefit as this infrastructure develops, since it already aggregates across the specialist lender pools that would draw most directly on richer SME financial data — invoice discounting and asset-based lending in particular, where real-time financial position already plays a role in underwriting. Regulatory change of this kind tends to move slower than the industry pushing for it would like, and the report's own criticism of the FCA and Treasury's timelines suggests brokers shouldn't expect Open Finance for SME finance to be live imminently. But the direction — more data, faster decisioning, fewer declines driven by information gaps — is one worth factoring into how lender panels and product mixes evolve over the next two to three years as finance distribution increasingly moves through integrated digital channels.

Frequently Asked Questions

What percentage of UK SME lending comes from fintech lenders?

Innovate Finance's September 2026 report states that fintech challenger banks and non-bank lenders now provide 68% of SME lending in the UK. The report doesn't publish a detailed methodology for this figure

What is Open Finance, and how is it different from Open Banking?

Open Banking allows customers to securely share current account data with authorised third parties. Open Finance extends that same data-sharing model across the rest of financial services — savings, investments, pensions, mortgages and SME finance — giving a fuller picture of a customer's or business's financial position and access to more personalised insights that help users make informed decisions.

How could Open Finance affect SME borrowing?

By using live financial data, Open Finance can support faster loan applications and credit assessments for smaller firms and medium-sized enterprises, while giving lenders a more up-to-date view of affordability and risk.

How much could Open Finance save UK SMEs?

The Centre for Finance, Innovation and Technology (CFIT) estimates Open Finance could unlock around £5bn per annum in SME finance, through financial health tools that could reduce SME loan declines by 50%.

When will the UK roll out Open Finance for SME finance?

Innovate Finance's report calls for HM Treasury to commit to Open Finance in three priority areas, including SME finance, by the end of 2026, with a regulatory framework to follow from the FCA. As of the report's publication, the Treasury's own timeline points to a consultation in 2027 — which the report describes as too slow.

Does Open Finance replace government-backed SME support?

No. Open Finance changes how financial data is shared and used, but it does not replace schemes such as the Growth Guarantee Scheme, which offers a 70% government guarantee on SME loans. In the current SME-funding landscape, the recovery loan scheme was its predecessor, while the British Business Bank administers the scheme and UK Finance remains a relevant industry body in the wider market.

Key takeaways

Fintech and non-bank lenders now account for the majority of UK SME lending, but the report's more significant finding is forward-looking: open finance, if accelerated, could give consumers and businesses a more complete picture of their finances and support better outcomes through faster, more accurate credit decisions. The policy asks are specific and time-bound, and the opportunity is not limited to debt finance because richer data may also support equity investment and venture capital decisions for new businesses over time, giving the market a concrete timeline to watch over the next two years.