“You absolutely can’t ignore” the fintech industry, says new CEO of the British Business Bank

Catherine Lewis La Torre says the fintech industry has a crucial role to play in helping finance SMEs as the country comes out of lockdown.

The fintech industry is an industry “you absolutely can’t ignore” says the new CEO of the government-backed body which has been responsible for administering emergency loans to banks and alternative lenders to help companies damaged by Covid-19.

Catherine Lewis La Torre, who took on the role of CEO of the British Business Bank this month, painted an upbeat picture of the role fintech can play as the economy tries to recover following coronavirus.

The BBB provides money through commercial lenders and fund managers to smaller companies and start-ups. 

Its remit has been thrown into the spotlight because it administered the Coronavirus Business Interruption Loan Scheme (CBILS), the Bounce Back Loan Scheme (BBLS) and Future Fund to stricken companies during the pandemic.

It is also, through VC fund managers, a significant investor in fintech and to date has supported fintechs including OakNorth, TransferWise, Funding Circle and Revolut.

“We think it is [fintech] an incredibly attractive opportunity. We think we are still at the very early stages of development of that whole sector and market,” says Lewis La Torre, speaking to AltFi.

“We know from many, many of our managers that the UK leads in fintech and it’s a sector that you absolutely can’t ignore.”

She sees fintech playing a crucial role as the country comes out of lockdown and businesses look to recover from the pandemic.

“We are expecting the alternative finance market to be a key part of that,” she says.

“What we know is that fintech platforms arrive at what is a much better-distributed product for smaller SMEs, which is the main reason why we have been providing wholesale funding there because they can reach into the market in a way that the major banks aren’t able to.”

The end of CBILS?

Accreditation for the CBILS is due to end at the end of September, followed by BBLS ending in early November, though some fintech leaders have called for the schemes to be continued.

Lewis La Torre is tight-lipped on whether there will be any extension to the schemes.

“This is going to be a decision for the Chancellor. I don’t have any particular crystal ball or insights into what the Chancellor will do I am afraid,” she says.

But Lewis La Torre, who was previously CEO of the BBB’s commercial subsidiaries, British Patient Capital and British Business Investments,  points out that the BBB’s role does not end once accreditation to the schemes are closed.

“These loans have a six-year-term, so it is not as if everything stops this autumn with these schemes. These programmes in terms of the loan repayment are going to run for many years,” she says.

“We have a forward role as well. We will be involved in the monitoring of the programmes as they continue to mature.”

The BBB, which hasn’t furloughed any staff during the pandemic, outsourced some of its emergency loan work, so there are no plans for redundancies as the emergency loan schemes draw to a close.

The CBILS came in for criticism from businesses who complained that they could not get approval due to tough rules set by banks and that funds would not reach them in time while fintechs complained that the BBB prioritised approval of high-street banks ahead of fintechs as lenders.

Lots of these issues were addressed as the schemes were finessed over time and more alternative lenders were approved.

With hindsight, Lewis La Torre admits “quite possibly” it might have administered the emergency loans differently, but says it took a “pragmatic approach” and that speed was of the essence in getting the schemes up and running.

“We did our very best to address those concerns” from fintechs, she says, adding that the BBB “ repurposed a team of people from with inside the back to work on accreditation, specifically looking at what more could be done to increase the diversity of the lenders that would be delivering these loans in a reasonable amount of time.”

Lewis La Torre’s appointment comes as the Treasury and the Department for Business Energy and Industry Strategy is undertaking a wide-ranging review of the role and remit of the BBB.

Like her predecessor Keith Morgan, Lewis La Torre believes the BBB has a key role to play in helping in supporting business growth and addressing regional disparities in terms of access to capital.

The BBB is currently piloting a scheme which sees Lewis La Torre returning to the office one day a week, which could be increased over time, as it takes its lead from government advice and the reaction of the staff.