The Role of Alternative Finance

Lessons from the UK

Recognizing that over 25 percent of small businesses, many women-owned, are rejected for business bank loans due to their risk models, the UK government has actively developed an alternative finance ecosystem, spurring investments of over £3.2 billion. This panel explored the latest trends in funding start-ups and high-growth women’s businesses from the perspective of different ecosystem players and discussed how banks can collaborate with or even fund alternative financers to meet the needs of women business owners at the different stages of development.

Key Points

    • The UK ecosystem has evolved so that there is no a longer a black-and-white distinction between the role that banks and alternative financers play when it comes to funding for women, particularly women’s SMEs.
    • The UK passed legislation to ensure platforms such as Funding Xchange are available to help women understand what credit is available to them. Funding Xchange has relationships with alternative financers to provide transparent and clear funding choices to customers, particularly those that do not have access to mainstream banks.
    • Currently, around 15 percent of the UK’s angel investors are women, and it is challenging to increase this number further.
    • Addidi began focusing on women when its research revealed that women’s wealth was growing quickly. It found that the driving reason for the low number of women angel investors in the market is that women tend to not have the time to conduct proper due diligence and tend to have less confidence when making investment decisions. Therefore, the company came up with a model that allows women to invest small amounts of money and engage with small businesses and philanthropic projects as mentors and investors without responsibility for pipeline development.

Alternative Finance UK 2017 GBA Summit 3

  • Recognizing it cannot serve the funding needs of all potential customers, NatWest has implemental portals and procedures to connect them with alternative sources of funding, including Esme Loans.
    • Esme Loans, funded by and housed within NatWest, is a 24/7 platform that uses simple and fast processes to provide loans to SMEs in specific secured markets. The entire processing time, including the application, takes about 20 minutes, with the loan decision made in real-time.
    • Esme’s current focus is on how it can bring more women-owned SMEs to the platform, starting with improving its risk analytics model to eliminate all bias that may currently be a barrier for women.
  • Providing financing for more women is a slow process, not only because the ecosystem is still developing but also because women are more inclined to prefer organic growth of their businesses by increasing cash flows rather than taking on debt.
  • Collaboration with other networks and players in the ecosystem is essential to close gender credit gaps and educate women about what options exist. Partner companies will need to agree on the business model and commission sharing, but the potential to grow the market is great.
  • Julie Baker of NatWest noted that open-source banking would enable financial service providers to share customer data and ultimately improve the offering and experience for customers, with particular impact on women.


Head of Partnerships & Innovation Management, NatWest

Co-founder and CEO, Funding Xchange

Founder and Managing Director, Addidi

Managing Director, Esme Loans

Head of Enterprise, Business Banking; NatWest


If women need access to finance and we can’t give it to them, we want to help them get it. We are just one part of the ecosystem.
— Alastair Hutt

We are about giving banks more transparency and certainty about what’s available – and thereby more choices.
— Katrin Herrling

Two statistics that stood out in our research were how quickly female wealth is growing and how few women angel investors there are.
— Anna Sofat

We need to adapt our business model to be sure we’re covering the entire market.
— Richard Kerton

There are often some quick fixes to help businesses get financing, such as being sure business owners are registered on the electoral roll.
— Julie Baker