Finance Connect industry debate: direct vs brokered SME lending

Brokers have been in the spotlight all year, with their role highlighted in the Supreme Court ruling on motor finance claims and the government’s review of how to expand finance offerings for small businesses, and so the Finance Connect Autumn conference gave two teams of experts the chance to lay out the pros and cons for SMEs of using intermediaries in the latest of the ever-popular industry debate sessions.

Audience opinion was divided at the start of the debate, with a poll showing 43% thought SME lending would be direct, while 57% maintained intermediaries will still have a role.

Speed of the essence

First speaker in favour of the motion was Christian Roelofs, managing director, Finativ, who took what he described as the “Bazball” approach, arguing that the way forward is “undoubtedly direct”, rather than via representatives in the field, and accepting no alternatives.

In Roelof’s view, AI tools can help guide SME owners through a loan application successfully, while a fully digital approach means lending products are commoditised and the complexity of options is reduced, making it easier for them to assess their options.

From the lenders’ perspective, having a digital “funnel” of potential business reduces their costs and protects margins. It also smooths their path with regulators, who will be happy that processes are controlled and consistent.

“You don’t need a human ‘packaging the deal’ – you just push the details into the tools the SME already uses,” Roelof declared.

In this automated world, potential SME borrowers will apply for funding via banking apps or an online platform, while customer service will be handled by an AI chatbot.

“Processes will be simpler, the technology will mean everything happens very fast, and the middle level disappears,” Roelof predicted.

Education, empathy, engagement

Countering this view, Alex Austin, manging director of Paddock Capital, was first to speak in opposition, describing the previous speaker as “an AI fanboy” and pointing to notable examples of where the technology has got requests wrong.

“Surveys of financial education in the UK show that only one in four describe themselves as ‘number people’, while 26% of adults have low levels of financial literacy. There is no confidence over finances so SMEs need a handhold – for example, a broker might tell a SME owner to hold off applying till they’ve got a second set of accounts as they are likely to get a better offer,” he argued.

The second pillar is empathy, with Austin pointing out that consumers want to deal with someone who listens, understands  and responds to their particular set of circumstances. “With direct only, that process is compressed into the numbers on a spreadsheet.  What SME owners want is the chance to explain their ‘lived context’ and that is where the broker can help tell their story to the lender.”

The final pillar is engagement, where Austin highlighted the broker’s role in offering details of a whole range of options, including smaller, independent funders who may not have the marketing budget to build high visibility websites designed to attract consumers, and so are overlooked.

“Brokers level the playing field, and without brokers you don’t get a fairer marketplace but a louder one. Going direct-only is not progress – it leads to doomsday,” was Austin’s conclusion.

Another mouth to feed

“The three ‘e’s I would emphasise in this debate are extinction, extinction, extinction. It’s a cheesy old saying that AI can’t form relationships – SMEs don’t want that. They want speed, transparency, and ways to take out cost. Brokers are simply another mouth to feed,” Betteley stated.

For Bettley, the argument rests on one issue: “direct lending means no commissions and so lower cost, and cost is very important to any SME owner”.

Sustainability

“The fast, frictionless, instant results approach is the one being pushed by the industry. But speed can mean rushed decisions, with SMEs not looking at the long-term sustainability of the finance. It’s the piece about looking to the future that the broker does, and AI can’t,” Berg said.

“Yes, brokers do cost money, but from the lenders’ perspective they earn that by adding expertise. They anticipate obstructions to the application, and create a smoother, better channel of applications,” he added.

Berg highlighted research showing 59% of applications for loans are abandoned mid-way while 57% of business forms have process errors, which strongly suggests there is a better success rate in applications submitted via intermediaries.

“Crucially, 25% of lenders report applicants take out a different product from their initial request. An expert, like a broker, can make sure the SME is doing the right thing for their business,” Berg maintained.

“We don’t want to join the march to a dystopian world where decisions are made by machines.  Brokers should be using technology to become better than ever before,” he concluded.

The arguments were impassioned and the speakers fired up, but the final poll showed the audience was largely unmoved in its views – while 40% now supported the proposition in favour of direct lending, 60% still saw a role for brokers – suggesting this an argument that will run and run.

“We’ll be dissecting all the pros and cons of another industry hot topic at our UK summer conference next year.”

Find out more about the UK Finance Connect Summer 2026 Conference on 4 June 2026 here.