A new report conducted by the Welsh Economy Research Unit at Cardiff Business School has revealed a largely positive picture of FinTech, relationship banking and lending to SMEs in Wales.
Commissioned by Economic Intelligence Wales to examine how FinTech affects SME access to credit and relationship banking in Wales, the study shows that strong, long‑standing banking relationships continue to support businesses while digital innovation is creating new opportunities for improved communication and faster access to funding.
Based on a survey of 206 Welsh SMEs, the study found that the majority maintain stable relationships with their main business bank, with around half having banked with the same provider for more than 20 years. Loans are the main form of external finance for SMEs trading over six years, and those businesses continue to report high levels of satisfaction where strong relationship banking is in place.
The report also highlights rapid and beneficial changes in the way SMEs and banks interact. Since the Covid‑19 pandemic, digital communication has increased significantly, with SMEs and banks engaging more frequently through email, online chat and video conferencing. Online applications for funding have also risen, with 25% of respondents saying that they now apply for loans online with their main business bank as it offers greater convenience and faster access to smaller loans.
The report notes that SMEs are increasingly comfortable using online channels for day‑to‑day banking and smaller loan applications. This shift has helped streamline processes and reduce communication barriers, particularly in areas where physical branch access has declined.
However, the research also reinforces the continued importance of relationship banking for larger, more complex lending decisions. SMEs with stronger relationships with their business bank were more likely to receive the loan amounts they expected and reported higher satisfaction with the support they received.
Professor Max Munday of the Welsh Economy Research Unit at Cardiff Business School said:
“Our research highlights rapid changes since the Covid‑19 pandemic, with technological trends set to continue at pace. Wales is experiencing a healthy evolution in SME finance and is well‑positioned to benefit from a hybrid future – one that blends the efficiency of digital tools with the trust and insight that come from long‑standing personal relationships.
“Digital tools are widening access and improving communication, while strong relationship banking continues to underpin successful lending outcomes. At the same time, the findings point to clear opportunities for further growth, particularly in helping SMEs strengthen their digital capabilities so that businesses across Wales can benefit fully from both technological innovation and trusted personal support.
“Technological advances have significantly reshaped communication patterns. While face‑to‑face contact has traditionally reinforced relationship banking, new technologies have increased the frequency and ease of communication, benefiting both banks and SMEs. Online loan applications have also risen post‑pandemic. FinTech providers therefore play an important role in improving access to finance—especially for smaller loans—yet strong relationship banking remains essential for securing larger, more complex lending.
“Finance providers should maintain both digital and relationship‑based application routes to best support SME needs. This is important as the shift to digital channels means less digitally mature Welsh SMEs may struggle to engage with services, especially in rural areas with fewer branches. Improving digital skills is crucial for SMEs to access financial services, as online resources now play a key role in maintaining relationships.”
Rhian Elston, Wales Investment Director at the Development Bank of Wales, said:
“This research is an important reminder of the role that funders play in supporting business growth and productivity across Wales. Understanding how SMEs engage with their banks helps us continually improve the way we work.
“At the Development Bank, we’re investing heavily in digitalisation to enhance the customer journey and make it easier and faster for businesses to access the finance they need. But we also know that nothing replaces the value of personal relationships. That’s why we continue to have teams on the ground throughout Wales – because face‑to‑face support remains a vital part of how we help businesses grow in all corners of Wales.”
Economic Intelligence Wales is a research collaboration between the Development Bank of Wales, Cardiff Business School, Bangor Business School, the Enterprise Research Centre, and the Office for National Statistics (ONS).
