A report from Oxford Economics, commissioned by Allica Bank, highlights the seemingly transformative role challenger banks play in driving Britain’s economic growth. The latest research report indicates that in 2024, Allica Bank’s lending to Britain’s established SMEs supported more than 84,000 jobs across the country, contributing “£5.8 billion to the economy and delivering £1.4 billion in tax revenues.”
The research reveals how a generation of lenders such as Allica are enabling steady growth and “productivity across Britain’s established SMEs.” Sometimes known as the ‘real economy’, these SMEs usually “employ between 5 and 250 people and account for over a third of the UK employment and turnover.”
From its first loan in March of 2020 to reportedly originating over £1.5 billion of loans to SMEs last year, Allica says it has now lent more than “£3 billion as of the end of 2024 – with it now surpassing £3.5 billion so far this year.”
The latest research report released by UK’s Allica Bank demonstrates the impact “productive finance has on the UK economy.”
Key highlights include:
- Supporting over 84,000 jobs - one in every 440 jobs
- £5.8 billion total contribution to UK GDP (£2.2bn direct; £1.8bn indirect; £1.8bn induced)
- Generated £1.4 billion in tax revenues
Allica’s impact is being said to have been felt right across the country. From Wales and Scotland to the East Midlands, Allica is helping fuel local growth and prosperity.
Allica’s lending supported nearly “10,000 jobs in the North West, 8,900 in the West Midlands and 7,700 in the East Midlands.”
As a share of regional employment, Allica’s impact was “largest in Wales and the North East.”
Behind the success is Allica’s combination of tech as well as its relationship manager team – a network of experts who “understand the needs of Britain’s SMEs and is set to double in size this year.”
Richard Davies, CEO of Allica Bank, said that established SMEs are the engine of Britain.
Davies added that yet for too long they’ve been underserved “by the incumbent banks and he is delighted to see this change as challengers like Allica support them in ways which really make a difference.”
They also mentioned that every £1 million in lending “issued by Allica enables our established SME customers to contribute £2.4 million to UK GDP, provide 35 jobs and £600,000 in tax revenue.”
Davies further noted that it is a direct impact –” creating jobs, unlocking investment and helping power growth across all corners of the country.”
The SME financing ecosystem has undergone a “shift in recent years, but small businesses remain underserved by big banks and face both a savings squeeze and lending gap.”
Allica research revealed that millions of SME deposits are sitting in accounts that offer zero interest, while big banks systematically “offer larger companies better savings interest rates than they offer small businesses, totalling £9 billion a year missing in lost savings interest holding back SMEs.”
Meanwhile Allica also revealed in April this year the £65 billion lending shortfall, in which “long term trends showed a collapse in lending to UK SMEs, drastically limiting their ability to scale.”
But as the legacy banks have stepped back, challengers like Allica have stepped up – with the British Business Bank highlighting that “over 60% of all SME lending is now coming from challenger and specialist banks.”
This is the highest on record, driven by “digital innovation, speed of decision-making and a focus on relationship-based lending. ”
From independent nurseries to manufacturing exporters, Allica’s impact has reportedly been felt across the UK – showcasing “the breadth of the Britain’s established SMEs.”
The research reportedly comes on the back of a solid year for Allica which also recently announced its third acquisition, acquiring UK embedded finance startup Kriya.
The acquisition accelerates Allica’s aim to penetrate around 10% of the established SME finance market by the end of 2028, “building on momentum and targeting advancing an initial £1 billion of working capital finance to SMEs.”