Allica Bank is set to announce a significant acquisition aimed at enhancing its lending capabilities for small businesses, reports BritPanorama. The digital bank has acquired London-based fintech firm Kriya, recognised for its expertise in embedded finance and business loans, according to City AM.
The acquisition, scheduled for announcement on Wednesday, marks Allica’s third takeover following the integration of Allied Irish Bank’s SME portfolio and the purchase of bridging finance specialist Tuscan Capital in 2024.
This latest move aligns with Allica’s ambition to secure £1bn in working capital finance—comprising short-term, accessible funding options such as loans and credit lines—over the next three years. As high street banks retreat from the small and medium enterprise (SME) lending sector, challenger banks like Allica are stepping in to fill the void.
Challenger banks now command 60 per cent of the SME lending market, a significant shift from 2019 when the four largest banks held 90 per cent of the market share. Allica aims to achieve a 10 per cent penetration of the SME market by the end of 2028.
Nonetheless, Allica faces renewed competition from major high street banks. Last month, UK Finance reported a 28 per cent year-on-year increase in lending to smaller firms by these banks in the second quarter of 2025. This surge occurs amidst government initiatives aimed at facilitating better access to finance, following discussions earlier this year between ministers and leading banking executives aimed at improving lending conditions.
Allica chief: UK has tendency to ‘shoot ourselves in foot’
Allica’s chief executive, Richard Davies, has frequently expressed criticism of the traditional SME lending landscape, suggesting it resembled a “barren wasteland” five to ten years ago. Speaking at a panel discussion on Tuesday, Davies highlighted the UK’s strong performance in fostering scaling fintech enterprises, while asserting there remains significant untapped potential.
“There’s access to good capital. There’s a huge scale of opportunity,” he stated during Innovate Finance’s Fintech as a Force for Good event. He observed that the UK tends to “shoot ourselves in the foot” through restrictive immigration policies and the withdrawal from free trade agreements.
Despite these concerns, he praised the UK as “a great country to start a business.” Following the acquisition, Allica confirmed that Kriya, previously operating as MarketInvoice and MarketFinance, will continue to operate under its independent brand identity.
Kriya, established in 2011, provides a deferred payment solution intended to enhance buyers’ cash flow. The company has partnered with retailers such as Halfords. In 2024, Kriya reported revenues of £12.6m, a decrease from £16.9m the previous year, with pre-tax losses of £9m, nevertheless an improvement from £11.5m in 2023. In early 2024, Kriya secured a £50m debt facility from Viola Credit to facilitate over £1bn in business-to-business transactions over the next 24 months.
The evolving landscape of SME lending highlights the growing influence of fintech firms amid a backdrop of changing dynamics in the banking sector. As challenger banks innovate and adapt, the potential for reshaping access to finance remains significant, although traditional players are beginning to reassert their presence.
