Nesta’s Challenge Prize Centre was deeply involved in the process from the early stage; we were already consulting with several UK banks around the need for more support for small businesses. The result of the investigation was a package of measures introduced that included open banking and, running at the same time, the Open Up Challenge
Open banking has the power to transform how we all bank. From January 2018, as mandated by the CMA, the nine largest UK banks began to roll out application programming interfaces (APIs) to allow regulated third parties to access, with customer consent, account information and/or initiate payments on behalf of the customer. This access to data is game changing. It allows new and innovative platforms to be developed that are designed to save consumers and small businesses time and money, find better services, reduce stress and discover intelligence in their financial data.
The Open Up Challenge was an important part of the equation; a high-profile prize initiative designed to unlock and accelerate the next generation of financial products and services for small businesses.
During 2016/17 Nesta’s Challenge Prize Centre designed the Open Up Challenge in consultation with the CMA, banks, fintech companies and small business representatives. As a leading global innovation foundation, we specialise in designing rigorous assessment processes tailored to specific social and economic challenges. Working in partnership with the CMA, we built on the authority’s extensive research into retail banking to design a prize that targeted specific market gaps – and which possessed the mandate to attract Europe’s best fintech entrepreneurs.
The process was critical to the challenge’s success. Four rounds of assessment took place and at each step the assessment process and criteria built on learnings from the previous rounds. An expert, independent panel of judges was kept informed by assessment reports prepared by specialists in user experience, customer acquisition, financial modelling, law and regulation as well as documents, videos and presentations submitted by the teams. It was important that the Judges had enough information to reach fair, informed decisions while allowing participants to continue with their projects free of bureaucracy. There were no easy decisions, and the Judges at each round held a lively discussion before reaching their collective decision.
Between 2017 and 2018 the Open Up Challenge has awarded £4.5m in funding to 25 technology companies culminating in the six winners recently announced. The final prize winners each received an additional £200k to further enhance their products and ramp up customer acquisition in 2019.
The Open Up Challenge is a powerful example of how public authorities can combine new regulation with targeted investment programmes to make markets work better. It’s not alone – the UK is a leading centre for challenge prizes that bring the public, private and charitable sectors together. Challenge prizes may not be a familiar part of our day-to-day vernacular, but they are gaining momentum among diverse organisations that share a common ambition to advance innovation for social good. The result is better solutions, faster, to society’s longstanding and emerging challenges.
The prize winners
Coconut - the current account that takes care of your accounting and tax, designed specifically for freelancers, self-employed people and small business owners.
Fluidly provides Intelligent Cashflow to help solve small businesses’ biggest problem - cashflow forecasting and management.
Funding Circle – the global small business loans platform matches businesses that want to borrow with investors who want to lend in the UK, US, Germany, the Netherlands.
Funding Options – Europe's leading online marketplace for business finance, each year raising more than £100m in vital finance for thousands of UK SMEs from more than 50 active lenders.
OpenWrks – the OpenWrks comparison service provides SMEs with a personalised comparison of banking products based on how they run their business.
Swoop - a one-stop shop for businesses looking to raise and save money.
Chris Gorst is prize lead at Nesta