During the FTT Lending conference in London, Martin Wallraff, Director at Payments Consulting Network, caught up with Christoph Rieche, CEO and co‑founder of iwoca, to discuss how digital lending can close SME cash‑flow gaps, why embedded lending via APIs has become the core of iwoca’s distribution. They also talked about where human relationship management still matters and why, in Christoph’s view, human judgement shouldn’t heavily influence credit decisions to ensure we avoid the bias that has excluded too many borrowers in traditional lending. 

Read the full interview below.

​Fixing small business cash‑flow – at scale 

MW: Christoph, how did you come to focus on small business lending, and what problem were you trying to solve with iwoca? 

CR: My co‑founder and I actually met at one of the early fintech meetups in London in 2011. That was really the first time we started talking seriously about fintech and identified a very clear problem in small business lending: businesses could not access the funding they needed, and many went out of business as a result.  

Short‑term cash‑flow gaps that could have been filled by someone simply weren’t being covered. If you cannot pay your supplier and they cut you off, you no longer have any product to sell; if a customer does not pay you and you cannot pay your staff, you may get away with it once, but if it happens repeatedly, staff will leave because they have their own obligations. A relatively short‑term cash‑flow issue can push a small business into a downward spiral it cannot stop.  

On the other hand, if you run a small business, there are constantly opportunities coming your way – for example, making an upfront investment to buy more stock at a good price when you know you can shift it. If you don’t have the money, you simply cannot grow the business to its full potential. We liked the idea that if we could fix that problem, we would give individual business owners a real opportunity either to grow or to overcome those short‑term issues.  

What excited us from the start was that, if you do this a million times over – and there are so many small businesses everywhere – you create real economic impact at scale. We did a study last year looking at the previous 12 months of lending, and it showed around £3.3 billion in additional economic value created (UK & Germany), roughly £2.20 of value for every pound we lent in the UK, 60,000 jobs supported and significant tax revenues enabled through our lending. That means what we were excited about 15 years ago – having a real economic impact – is now something we can measure. 

A third strand from the beginning was technology. The ability to extract data via APIs, use open‑host technology and apply modern models did not really exist in the 1990s or early 2000s. When we started in 2012, there was something genuinely new to bring to the table in terms of technology and data, and that is still true today. 

“A Formula‑One car for SME lending” 

MW: You described iwoca on the panel as having built a “Formula‑One car for SME lending”. What do you mean by that? 

CR: As I mentioned on our panel, we really did build a Formula‑One car for SME lending: a platform that is entirely tech‑ and data‑driven, coupled with fantastic customer service. The customer service itself is enhanced by having better systems to support customers, so that we can respond in a very personalised and competent way. 

Every part of the interaction with our customers – from the application stage all the way to collection of repayments – is tracked, optimised and continuously improved. That has been our starting point since we built the platform in 2012, and it remains an ongoing process of making the machine better. 

Chapter two: embedded lending via APIs 

MW: How did your model evolve from that original lending platform to today’s embedded finance approach? 

CR: Around 2017 we started building a slightly new model, moving beyond just the lending “racing car”. The problem we were facing is that a startup has very limited awareness, and acquiring customers is expensive. Many businesses must spend huge amounts on marketing, running campaigns costing tens of millions to build a brand like Nike or a marketplace. 

We asked ourselves how we could use technology instead of just following that old playbook. That was the starting point of our embedded financing API. In 2017 we launched an API with Tide, the business bank, so that Tide customers could apply for finance from within their familiar environment. We would receive the data, make a decision and send the decision back; initially, customers could even draw down the funding directly on the Tide platform into their bank account. 

What began as a good idea in 2017 is now where the majority of our applications come from – through our embedded finance technology. If the first chapter was building the core lending platform, the second chapter was innovating in customer acquisition: bringing finance to where businesses are, instead of waiting for them to discover us and come via a traditional website. 

Chapter three: vertical integration, M&A and SME credit scores 

MW: You also talked about a “third chapter” that started last year. What does that involve? 

CR: Based on the success of our embedded financing – and of iwocaPay, which is B2B BNPL.  We have thousands of merchants offering finance to their customers – we have started to integrate vertically. Up to now we generally embedded our financing into other people’s services; now we are building more of the surrounding services ourselves. 

Last year we launched, for example, an SME M&A platform – manda. SMEs often find it difficult to sell their business, and there is a massive succession‑planning issue in the economy with so many baby‑boomer owners. We use the data we have on our customers: if they are interested in selling, we can present them so that potential buyers see a pool of owners who genuinely want to sell. We are building technology this year to make that process as seamless as possible, and acquisition finance is embedded into the offering – whether it is a management buyout or a manager‑led transaction, we can provide the financing to make it happen. 

We have also launched a credit score for SMEs called Credit Compass. In the consumer world, most adults know and track their own credit score reasonably often, and those products are quite good. In the SME space, coverage and quality are much weaker, so we decided to launch that service ourselves. Businesses can track their credit standing, and if they are interested in credit, we can provide it. It is a value‑adding service, but one that also has a clear relevance to our core lending. 

How far can embedded SME lending really go? 

MW: You started with very immediate financing needs, and now you are moving into areas like acquisition finance. How far can embedded lending go in terms of complexity and ticket size? 

CR: I think you have to distinguish between different types of transactions. With iwocaPay, which is fully automated, if you are buying, say, a franchise or a training course that costs £10,000 and you want to spread that over 12 months, you don’t need a relationship manager at the point of sale. It is a natural transaction, and we don’t see buyers calling in with lots of questions in those situations. 

But there are many businesses that do call us. Even for £1,000, £5,000 or £10,000, they may want a personal conversation – depending on the size of the facility relative to their business and how much comfort they want with what is, for them, a very significant transaction. That is why, although we are fully automated and a technology business, we do have a team providing exceptional customer service and account management. 

Borrowing for your business is generally not an impulsive decision, unless it is very tightly tied to a specific transaction like the course example. When they are taking a loan, people often want to speak to someone, so for us account management absolutely starts from around £1,000. 

Relationship management vs. credit decisions – and the risk of bias 

MW: Some argue that once lending gets complex, relationship management is everything and you can’t really do it in a fully digital way. How do you see the role of people versus automation? 

CR: For me, there is a very clear distinction. There is account management, which is about providing competent service, and there is credit assessment, which should not be biased by human intervention. 

The old idea that you “look someone in the eye” and decide whether you think they are a good credit, then pass that judgement to the credit team – “I really like Martin, he is a good guy, he is a member in all the right clubs and seems pretty sensible – is not relevant for lending. That is where human bias comes in. It is how minorities end up being excluded, when business owners don’t match a lender’s mental picture of a typical client. We’re removing all the bias in lending decisions.  

If you let those relationship‑based impressions influence lending decisions, you just re‑introduce all the biases we have as a society, and I think that is a very dangerous direction. I am quite surprised that the new “holy grail” for some people seems to be looking borrowers in the eye again to decide whether they are creditworthy, instead of looking at their numbers and their business. 

So yes, account management is very important from a customer‑service point of view (majority of our calls are answered within 20 seconds), and for many products you also need people to manage processes. But that is an operations and processing question, not a reason to inject human bias into the credit decision. 

Are UK SMEs starved of credit – or just under‑indexed? 

MW: What is your assessment of the condition of UK SMEs today – are they starved of money, comfortable, or somewhere in between? 

CR: UK SMEs are under‑indexing the amount of funding they have relative to what they should have, given economic growth. Since 2015 the nominal outstanding SME debt in the UK has not increased, despite there being some economic growth over that period. 

That means a sizeable gap has opened up between where debt levels should be – compared to other countries and to the trajectory of the economy – and where they actually are. There is a clear need for more funding, and that need is increasingly being met by lenders outside the big banks, including companies like us. 

​​​Today, roughly 60% of new SME lending comes from alternative lenders, up from 39% for alternative lenders back in 2012, with only about 40% coming from the big five banks. That tells you two things: the big banks have retrenched, and at the same time we now have a vibrant set of additional lenders. Those lenders are able to serve a much broader credit spectrum, so many more businesses are being funded than in the past. My expectation is that, with that capacity in place, you will see growth follow. 

FTT Lending 2026 

MW: Finally, what did you most enjoy at FTT Lending? 

CR: This is an industry that is genuinely rethinking how credit gets to the businesses that need it, and you feel that energy in the room. There was a real debate about the role of technology versus relationship, which is close to my heart, and I think we are at a pivotal moment where the data-driven approach is proving itself beyond any doubt. Events like FTT matter because they hold the whole ecosystem – lenders, partners, platforms – accountable to each other, which drives everyone forward.  

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Author: Martin Wallraff, Director, London, Payments Consulting Network   

Martin brings over 18 years of experience in financial services strategy consulting, both with external consultants and internal strategy teams. For the past decade, he has specialized in payments, fintech, and transaction banking, advising clients on strategy, market entry, product development, and cost management. His extensive international expertise includes leading projects worldwide and residing in various locations across Europe and Southeast Asia. 

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Payments Consulting Network was a media partner of FTT Lending. We also support other FTT’s upcoming conferences such as FTT Embedded Finance & Super-Apps and FTT Payments.

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