Commercial Finance Conference 2025: key takeaways for unlocking economic growth

On 20 May, UK Finance welcomed over 170 delegates to its flagship Commercial Finance Conference, hosted by headline sponsor DLA Piper.

Sponsors Climate X, Experian, and FXE Technologies joined industry leaders, regulators, Government officials and other stakeholders to discuss the evolving landscape of SME lending and commercial finance.

This blog post takes a look at six key takeaways from the conference. The full agenda and list of speakers can be found here: Commercial Finance Conference 2025 | UK Finance.

The global drive for greater national economic self-sufficiency and rejection of interdependence is unlikely to be feasible

The conference was opened by Ben Chu, Policy and Analysis Correspondent at BBC Verify and former Economics Editor at Newsnight, who summarised the recent trend towards “Exile Economics” – the rejection of interdependence; the downgrading of collaboration; and the striving for greater national self-sufficiency. He noted that it is likely unfeasible in practice: modern supply and value chains are unfathomably complex; most countries lack the natural resources to be functionally economically independent; and trade drives productivity growth. A more closed global economy is likely bad news for the UK.

Ben also highlighted the importance of the financial services sector for the UK’s economy.

SMEs are facing challenging times

The conference revealed challenges in SME financial health and business performance. The next 18-24 months are expected to be challenging as businesses grapple with rising costs, including energy cost increases, minimum wage rises, National Insurance increases and business rate rises.

Around 70 per cent of businesses have reported lower revenues compared to this time last year. Loan-to-value ratios are higher than before the pandemic, and cash balances are 50 per cent lower.

Some small businesses have experienced energy increases of up to 400 per cent, virtually overnight. Late payments issues continue to plague the sector, with 80 per cent of businesses offering direct debit and avoiding trade credit.

The current state of commercial lending is cautiously optimistic, tempered by emerging challenges

Supply and demand of SME lending have both recently seen some uptick. That said, the rise in demand seems to be for short-term lending, with businesses seeking working capital, rather than growth-led demand. On the supply side, lenders – including mainstream banks – have increased lending to higher-risk businesses, though delinquency rates are also at their highest since the pandemic.

Environmental, Social and Governance (ESG) strategies are good for firms and businesses, regardless of waning political support

Despite political support fracturing with some groups contending that ESG undermines economic growth and household living standards, panellists stressed that embracing ESG strategies will continue to provide an opportunity to reduce costs, and improve sustainability performance and compliance. ESG strategies also offer strategic value in new products and services, staff retention and motivation and with business-to-business supply chains.

Digital transformation could transform how SMEs engage with financial services

Three experts pitched the following potentially transformative innovations:

Digital Company ID – with SMEs facing up to 150 questions just to open a bank account and financial firms spending billions on compliance, digital ID initiatives could bring an estimated 50 per cent reduction in verification costs, 60 per cent less time needed for onboarding and 33 per cent improvement in completion rates.

Open Finance – this could enable SMEs to share financial data with trusted third parties, promising improved access to finance, more tailored financial products, streamlined operations and reduced costs.

Tokenisation – the tokenised asset market is forecast to surpass $30 trillion by 2034. For SMEs, this could deliver: instant-low cost payments; improved cash flow and liquidity; automated processes reducing intermediary dependence; and enhanced access to capital through asset fractionalisation and securitisation.

UK Finance members have a key role to play in supporting SMEs

A fireside chat between UK Finance’s Chief Executive, David Postings, and Commercial Finance Managing Director, David Raw, revealed:

There is currently an attitude of risk aversion across industry. No one factor has led to this but regulators, Government, press and the industry itself have all had a role to play in developing this mindset, post-the global financial crisis.

UK Finance has had significant and positive engagement with the current Government on issues of importance to the sector as a whole. The Government has been listening closely to the recommendations UK Finance has put forward both ahead of the 2024 Mansion House statement and more recently in our Plan for Growth. Engagement with the Prudential Regulatory Authority has led to wins for the industry, but concerns persist over capital requirements, which remain too high and uncompetitive.

Looking to the future, the industry will have to adapt to evolving practices and ensure financing models align with technological advancements. Addressing fraud risks and ensuring certainty in financial service delivery remain critical industry priorities.

Area of expertise:

Commercial finance