The UK government has launched several initiatives to help SMEs tackle hurdles and thrive. Especially since their sustained success would have a direct impact on the UK’s economy. Amidst these initiatives, the Smart Data Bill stands out as a beacon heralding SME success in the years to come.
Based on recent industry events and practical applications, this blog explores how the DISD bill has evolved, and the major changes expected in SME funding access across the UK.
The Current State of SME Financing: Challenges and Opportunities
Even with their established significance, SMEs face great difficulty acquiring capital. Depending on past data and antiquated credit ratings, traditional lenders such as banks or financial institutions are stuck with outdated approaches for evaluating SME funding requirements.
They often fail to gauge the potential of new businesses or their innovative products or services. This failure to recognise the genuine potential of budding businesses results in deserving SMEs being denied the funding they deserve. Such scenarios are missed opportunities for growth with an adverse impact on lenders and borrowers alike.
Companies are discouraged from seeking funds or are unable to satisfy the stringent criteria set by traditional lenders. Such financial constraints draw attention to the need for a more complex, data-driven approach to SME funding.
The Digital Information and Smart Data Bill
For small and medium-sized businesses, the Digital Information and Smart Data Bill (DISD) marks a pivotal shift for SMEs and their access to funding. The DISD Bill introduces a legislative framework that facilitates the secure sharing of business data between SMEs and authorised third-party providers (ATPs).
The bill seeks to improve data portability and interoperability across several industries, including finance, utilities, and communications. This will be achieved by standardising data formats and establishing clear consent procedures.
Key Provisions of the Smart Data Bill include:
• Business Data Standardisation: Establishing consistent data formats for company information, financial activities, and tax records would help improve the reliability and uniformity of business data.
• Consent-Based Data Sharing: Encouragement of SMEs to provide clear permission for data exchange, hence improving control over their financial records.
• Improved Data Portability: SMEs can freely move their data across different service providers, hence promoting innovation and competitiveness.
These steps are meant to alleviate the data asymmetry that usually prevents SMEs from getting access to capital, allowing lenders to make more informed and quicker credit decisions.
The Evolution of the DISD and DPDI Bills:
- DISD Bill (Digital Information and Smart Data Bill):
First announced in the King’s Speech of July 2024, the bill’s original name was DISD. It addressed several data-related topics, including digital identity verification, smart data systems, and data security, which covered various sectors.
- DUA Bill (Data Use and Access):
This is the current bill that replaced the DPDI and the DISD Bills. It was introduced in Parliament on October 23, 2024, and focuses on establishing a framework for digital identification systems, regulating data usage and access, and modernising data practices. The latest iteration of the bill as of March 13th, 2025.
- DPDI Bill (Data Protection and Digital Information Bill):
This was the previous bill that the DUA Bill is building upon. It was not passed before the dissolution of Parliament.
How the Smart Data Bill Affects Lenders and SMEs
For lenders, the DISD Bill offers several advantages:
• Enhanced Risk Assessment: More accurate risk assessment and credit scoring made possible by greater data access
• Improved Efficiency: Automation of Data Collection and analysis techniques lowers manual intervention, saving cost and expediting decision-making.
• Market Expansion: Lenders can diversify their portfolios and improve profitability by leveraging previously neglected SMEs.
For SMEs, the DISD Bill offers the following advantages:
• Enhanced Access to Finance: Previously disregarded businesses can access funds thanks to increased data points.
• Improved Lending Terms: Open data sharing helps to produce more competitive lending terms and conditions.
• Improved Financial Management: SMEs learn about their financial situation, which helps to guide development plans and more accurate projections.
Strategic Recommendations for Stakeholders
To fully harness the potential of the DUA Bill, stakeholders should consider the following strategies:
- Adopt Open Data Standards: Lenders and service providers should align with the data standards outlined in the Bill to ensure seamless integration and interoperability.
- Invest in Digital Infrastructure: SMEs should invest in digital tools and platforms that facilitate data sharing and financial management. Platforms like Pulse are ideal for helping SMEs streamline, optimise, and revolutionise the use of financial data with real-time data analytics. It is a comprehensive platform that offers tools, features, and potent modules designed to help SMEs unlock the full power of their financial data.
Pulse’s business insights transform financial data into actionable business insights. Modules like DebtorIQ (accounts receivable) and aiPredict (cashflow forecasting) can help SMEs take full control of their financial health and plan for future scenarios.
Pulse, being an award-winning SaaS company, also offers a comprehensive loan-originating system that helps automate and expedite the loan process, from commencing a deal to disbursement. Pulse harnesses the power of AI and intuitive algorithms to process over 95% of deals in less than a minute. This lightning-fast turnaround time has given alternative lenders in the SME market the ability to offer bespoke funding by leveraging Pulse’s underwriting engine to automate and expedite the entire lending process. This helps create the ultimate value proposition. To learn more about Pulse, book a demo today.
• Encourage Financial Literacy: Data sharing’s advantages and procedures should be demonstrated to SMEs so they may participate more fully and have faith in the system.
• Collaboration: Encourage innovation and a more inclusive financial ecosystem through cooperation among fintech firms, established banks, and regulatory authorities.
Conclusion: The Future of SME Financing
A major turning point in the development of SME financing in the UK is the advancement of the DISD Bill and its latest revisions: the DUA Bill. These regulations create the foundation for a more accessible and active credit market by allowing safe and effective data sharing. The financial situation will become equitable as SMEs embrace digital tools and data-driven solutions, thus encouraging innovation and economic development.
In conclusion, the Digital Information and Smart Data Bill is a transformative project with great potential to reshape SME funding moving forward. The DUA Bill is currently being reviewed in The House of Commons, pending a 3rd reading. The Bill opens the path for a more robust and inclusive economy by empowering companies with more control over their financial data and encouraging informed lending decisions.
