Q&A with Jon Martingale, Head of Product Management at FreeAgent. Here, Jon shares practical insights on how fintech is evolving to meet the needs of growing SMEs, covering everything from scaling challenges to AI-driven innovation.
FI. The financial needs of a microbusiness and a growing SME can look very different. How are fintech providers adapting to these differences?
JM: The needs of a small startup are typically straightforward in terms of finance and tax; keeping on top of day-to-day expenses, submitting tax returns and making sure cash flow is steady. But as businesses grow, complexity increases. A 20-person SME may need payroll, more detailed reporting, compliance support and even international payments.
For a long time, fintech tools focused almost exclusively on the microbusiness end of the spectrum and the gap for growing SMEs is now being recognised. We’re seeing more providers offering advanced features such as management reporting, forecasting tools and payroll integrations – the kinds of capabilities that used to be reserved for enterprise software. Partnerships between fintechs and other service providers are also becoming more common, allowing SMEs to access global payments or financing solutions that were previously out of reach.
The trend reflects a maturing market: SMEs aren’t just “slightly bigger” microbusinesses. Their financial needs evolve in very specific ways and fintech is beginning to respond.
FI. What design principles should fintech providers follow to support both microbusinesses and growing SMEs?
JM: Design is where the real challenge lies. Microbusinesses want absolute simplicity: tools that are intuitive, require little training, and make basic tasks like submitting expenses or reconciling bank transactions effortless. If the interface feels too complex, adoption drops off quickly.
Larger SMEs, on the other hand, need depth. As they grow, they expect advanced capabilities such as detailed reporting, cash flow forecasting, payroll integration, and collaboration features for accountants and advisers. The key for fintech providers is to design platforms that can meet both sets of expectations without forcing businesses to switch systems as they scale.
That’s why flexibility and modularity are becoming so important. A well-designed product allows a sole trader to use only the essentials, while the same platform can “unlock” more advanced tools as the business matures.
In short, fintech product design has to balance simplicity for microbusinesses with scalability for SMEs. Those that get this right will be best placed to support businesses throughout their growth journey.
FI. AI is reshaping financial services. Where do you see AI making the biggest impact for SMEs?
JM: AI is already transforming financial management for SMEs, particularly through automation- reducing the burden of manual tasks such as data entry, transaction categorisation and expense reconciliation. For SMEs without large finance teams looking to grow, that’s a real productivity boost.
For longer-term true potential, the focus needs to be on insight. Many SMEs struggle with visibility into their financial health, especially when it comes to forecasting. AI can analyse past patterns, invoices and tax obligations to flag risks or opportunities early. That could mean spotting a cash flow issue weeks in advance or identifying clients who are consistently late with payments.
There’s also scope for personalisation. Just as consumers expect apps to recommend the next best action, SMEs may come to expect financial tools that provide tailored guidance. AI is already becoming less of a back-office tool and more of a co-pilot in decision-making for business owners.
FI. What regulatory challenges should SMEs be aware of, and how is fintech helping them adapt?
JM: One of the most significant upcoming changes for UK SMEs is Making Tax Digital (MTD) for Income Tax, which will begin in April 2026. This initiative will gradually replace Self Assessment for most self-employed individuals and unincorporated landlords, requiring digital record-keeping and quarterly updates to HMRC, followed by an annual declaration. Over the next few years, the income thresholds will lower, meaning a growing number of businesses will be affected.
For SMEs, this shift represents more than a compliance requirement; it’s a move towards continuous, digital financial management. Businesses will need to keep accurate digital records of income and expenses, review figures regularly and prepare quarterly updates rather than waiting until the end of the year. This can help business owners maintain a clearer picture of their finances, improve forecasting and make more informed decisions.
Fintech tools are increasingly designed to help SMEs not only meet these new obligations but also unlock added business value. Accounting software compatible with HMRC requirements allows SMEs to automate data capture, generate reports and submit updates efficiently. Early adoption can reduce administrative burden, improve confidence in financial management and create space for more value-added activities. By embedding compliance into everyday workflows, fintech can help SMEs turn regulatory change into an opportunity for greater financial control and strategic insight.
FI. Looking ahead, what trends will shape the next generation of SME fintech tools over the next few years?
JM: A number of key trends are shaping the next generation of SME fintech tools. E-invoicing is emerging as a major development, driven by government mandates to increase transparency and reduce fraud. For SMEs, this will mean moving away from paper or PDF invoices to fully digital, machine-readable formats. Fintech providers are already preparing for this transition.
Integration is another key trend. SMEs increasingly want their finance tools to connect seamlessly with other parts of the business, from HR and payroll to payments and compliance. This requires stronger partnerships across the fintech ecosystem and platforms that can offer a joined-up experience.
Resilience is also becoming more of a priority for businesses. The disruptions of recent years – from banking outages to supply chain shocks – have highlighted just how vulnerable businesses are. Tools that support better forecasting, diversification of payment options, or multi-banking capabilities will be increasingly valued for helping businesses maintain continuity and adapt quickly.
Looking more broadly, three shifts will define the sector over the next five years. First, regulation, whether through Making Tax Digital or e-invoicing, will continue to drive fintech adoption, as compliance becomes too complex to manage manually. Second, AI-driven insights will make financial management more proactive, enabling SMEs to plan ahead and anticipate issues rather than simply reacting to the past. Third, collaboration across providers will become the norm, with SMEs expecting their accounting software, banks and payments platforms to work together seamlessly.
Overall, the direction of travel is clear: fintech is evolving from a back-office enabler into a strategic partner, helping SMEs grow, adapt and navigate an increasingly complex business environment.
Author: Jon Martingale, pictured, Head of Product Management at FreeAgent.
