UK SMEs stuck in verification gridlock as FinTech lags behind

By Puja Sharma

Umazi report exposes how outdated verification systems are strangling small business survival in a worsening economy.

As UK small and medium-sized enterprises (SMEs) wrestle with inflation, rising taxes, and an escalating cost-of-living crisis, a new report from digital identity platform Umazi , reveals a compounding, largely overlooked threat: the country’s outdated and inefficient business verification systems.

The report, Broken ID, Broken Growth: The UK’s Verification Chokehold, exposes how legacy, paper-based processes are not only wasting time and resources but are actively preventing SMEs from accessing vital services, crippling their ability to grow, operate efficiently, or even get off the ground.

With the UK government’s focus on SME growth and now the newly launched industrial strategy, the ability to ride the opportunity will be hampered by outdated verification processes, said Cindy van Niekerk, CEO and Founder of Umazi.

“We’ve spoken to business owners who’ve had to submit the same documents repeatedly just to get through basic onboarding. Some are waiting weeks just to open a business bank account. Others are denied finance not because of poor performance, but because they haven’t been operating long enough to satisfy outdated paper-trail requirements. It’s not just frustrating—it’s actively sabotaging our economy from the inside out.”

Broken systems, broken growth

According to the report, over one-third of SMEs (35%) identify duplicative verification requirements and endless paperwork as one of their biggest operational challenges in 2025 so far. These aren’t minor inefficiencies—they are blocking businesses at some of the most critical points in their development.

A staggering 90% of respondents said they have had to resubmit the same documents multiple times during registration or funding applications. In some of the worst cases, the same forms and credentials were requested up to ten times, creating weeks, sometimes months, of avoidable delays before a business can even begin trading.

“These kinds of delays aren’t just red tape—they’re growth traps,” van Niekerk explained. “They stall innovation, deter investment, and exhaust entrepreneurs before they’ve even had a chance to build momentum.”

A catch-22 of verification

While these inefficiencies waste precious time, their most damaging effect lies in the restriction of business finance. The report found that 30% of SMEs have been unable to access the funding they need to grow or sustain operations. Of those rejected, half were told the reason was a lack of trading history or insufficient documentation, despite often providing extensive paperwork.

“This is the absurd reality SMEs face,” van Niekerk continued. “They’re denied the opportunity to grow because they haven’t already grown. It’s a catch-22 built on paper-based and manual processes —and it’s holding back some of the most innovative, job-creating companies in the country.”

An urgent need for reform

While the UK government continues to tout its so-called digital transformation agenda, SMEs remain stuck in a system built on paperwork and repetition, highlighting a glaring contradiction between policy promises and practical progress.

Umazi argues that a secure, reusable digital business identity could revolutionise how SMEs verify themselves, removing duplication, enabling instant authentication, and dramatically reducing fraud risk. Businesses would be able to “verify once, share many”—freeing them from the current maze of bureaucracy and repetitive documentation.

Van Niekerk concluded: “We already have the tools to fix this, what’s missing is urgency and leadership. Until we replace paper-based systems with digital trust infrastructure, we’ll continue to choke the very businesses we rely on to create jobs, deliver services, and power our communities.”