Should SMEs be worried about Aldermore’s false start?

Last week’s Aldermore news left some SMEs in doubt of the future for challenger banks. The British banking newcomer cancelled its planned IPO, despite a valuation of £880m, citing a lack of interest among investors.

Shortly afterwards, Virgin Money announced that it has also postponed its flotation for the same reason. Both firms are highly visible challengers to the established high street banks, yet both have claimed that the conditions aren’t right…just yet.

Cancelling or postponing an IPO is roughly the same as turning up an hour late to your first job interview - you can still get the job, but you’ve turned those you need to impress against you before you’ve even started. Both Aldermore and Virgin Money are now planning to wait until the market conditions improve, stating a tentative date of May 2015, but face an up hill battle in restoring confidence among investors.

Fintech is booming - even the CEO at Barclays recently claimed that the industry is on the edge of a ‘revolution’ in financial services. Despite Aldermore’s setback, I expect investment to continue to go into alternative finance over the coming months - the industry is growing at such a rate that last week’s news will likely be the exception, not the rule. As investment pours into non-bank alternatives, SMEs have never had such a wide range of support.