Executives of digital finance firms in Britain have warned that it will be harder for them to raise funds due to higher interest rates and investor caution following the collapse of Silicon Valley

Bank (SVB), a US-based technology lender. Speaking at the Innovate Finance conference in London, TS Anil, CEO of British digital bank Monzo, said that the bar on capital has been raised, and investors are holding companies to higher standards. Last month's banking sector turmoil, which was sparked by SVB’s failure, could lead to a broad shake-up in the digital finance sector. While executives are confident the sector can weather tough economic conditions, pressure is building on business models.

The Bank of England has raised interest rates 11 times since December 2021 to combat soaring inflation, which has squeezed living standards. However, the hikes have also led to higher funding costs for companies. Anil said this was "healthy for the industry because it takes the froth out."

The Bank of England is reportedly considering an overhaul of its deposit guarantee scheme, which could include boosting the amount covered for businesses if lenders hit trouble. Innovate Finance has warned that Britain's digital banks will need support over the next few weeks and months to help them cope with the market fallout from SVB's demise.

Lisa Jacobs, CEO of fintech Funding Circle, said much of the digital finance industry had only ever known low interest rates, but she was confident the industry could still show its value. Sam Everington, senior executive at British digital bank Starling, said that the Bank of England looking at the regulations was the sensible course of action. Photo by Minh Nguyen, Wikimedia commons.