UK based Innovation Foundation Nesta has opened applications for the Open Up Challenge, a £2.5 million prize fund backing next-generation Fintech for small businesses. This is a global competition and Nesta encourages aspiring Fintech companies from around the world to apply. Both start-ups and established companies have until 4th May to apply. Fintech firms may be based anywhere but their services must be able to be applied to UK firms. The Open Up Challenge is part of a package of reforms to retail banking from the UK Competition and Markets Authority (CMA). The Challenge is backed with funding from eight of the UK’s largest providers of SME banking (Barclays, HSBC, Lloyds Banking Group, RBS, Santander, AIB Group (UK) plc., Bank of Ireland UK and Danske Bank).
Chris Gorst, Challenge Prize Lead at Nesta, said that Open Banking is becoming reality in the UK and they have already seen Fintechs build tools and services that will improve the way SMEs access and use financial services;
“The next phase of the Challenge builds on this by encouraging these innovators to develop solutions that will enable small businesses to better navigate the market and compare the products and services now available to them. It was evident from the first phase of the Challenge that there is an abundance of pent-up innovation ready to come to market and open banking has the potential to radically reduce the barriers for these new products to emerge. This is good news for small businesses. The Challenge is open to everyone, not just previous winners, and we are genuinely excited to see what other solutions the prize unearths.”
The Open Up Challenge seeks innovative products and services that will help SMEs save time and money, find better services, reduce stress and discover the intelligence in their financial data. As we all know, SMEs are the foundation of the economy providing jobs, economic growth and prosperity. Encouraging a robust SME environment is a vital policy for any economy. The Challenge is looking for Fintech solutions that will promote competition, and teams may apply for one of three prize tracks:
- Business Current Account (BCA) Track: The Challenge is looking for solutions that will (at a minimum) help small businesses navigate the market for business current accounts. This service could be embedded in a wider product.
- Credit Track: The Challenge is looking for solutions that will (at a minimum) help small businesses navigate the market for unsecured loans of less than £25k. This service could be embedded in a wider product.
- New Frontiers Track: The Challenge is issuing an open call for next-generation products and services that will create substantial value for small businesses and strengthen competition. With real-time, permissioned access to small businesses’ account transaction data now enabled by open banking, there is an unprecedented opportunity to re-think financial services for small businesses.
According to Nesta, at the end of June a judging panel will award grants of £100,000 to ten to twelve finalists to develop their products for the Challenge. Five or six of those teams will win prize awards of at least £200,000 in November.
The Open Up Challenge was originally announced by Nesta in February 2017 in a global search for organisations seeking to use new open banking technology to transform the way small businesses use financial services.
Nesta reports that twenty teams participated in the first phase of the Challenge, each receiving a £50,000 development grant. Ten teams were then selected in December for developing products assessed as most likely to have a positive impact for UK small businesses in 2018 and beyond.
The teams, awarded an extra £100,000 each, represented a mix of established and early stage Fintechs adopting a range of data-driven approaches to solving real problems faced by small businesses. Many of these original twenty teams are expected to apply to participate in the second phase, along with a fresh cohort of applicants.