The Open Up Challenge was a prize fund backing the next generation of financial technology for small businesses. We looked for products, services, platforms and marketplaces which shared our vision for radically better financial technology. The prize fund awarded £4.5m in equity-free funding to 25 fintech companies, ranging from angel-stage startups to pre-IPO ventures.
We believe that financial technology has the potential to create substantially more value for small businesses, helping them to save time and money, access better products and services, reduce stress, manage risk and generate insights to grow revenue. Much of this potential remains unfulfilled, but several trends are combining to make now a good time for startups and other challengers to enter the market, including:
- the increasing ease with which small businesses can securely share their financial data across applications, enabled in part by Open Banking;
- the growing numbers of young company directors with greater openness to technology solutions;
- stagnant bank lending encouraging, or forcing, small businesses to seek alternative credit providers; and
- accountants turning to software to cut costs and offer higher-value advisory services at scale.
The 25 fintech companies we backed are leveraging these trends, and others, to develop new products, services and business models.
Who Was Behind This?
The Open Up Challenge was run by Nesta Challenges, through Nesta’s wholly owned subsidiary Nesta Enterprises Limited. All Open Up Challenge grants and prizes were awarded by an independent Judging Panel.
The prize was backed by the Competition & Markets Authority (CMA), with funding from eight of the UK’s largest providers of SME banking: Barclays, HSBC, Lloyds Banking Group, RBS, Santander, AIB Group (UK) p.l.c, Bank of Ireland UK and Danske Bank. The Challenge formd part of a package of CMA remedies aimed at shaking up retail banking and sits at the heart of the UK's open banking agenda.
Nesta is a global innovation foundation with a mission to spark and shape new ideas to improve how the world works for everyone. Nesta Challenges uses prizes to stimulate innovative solutions to some of the biggest challenges we face. Challenge prizes are a simple but powerful idea. A problem or opportunity is identified, the challenge is publicised and rewards offered to those who can deliver the best solutions.
Open banking APIs are now live in the UK market, enabling small businesses to securely and conveniently share their data with third parties. The APIs also enable those challengers to get real-time access to product information from the providers of current account, unsecured small value loans and overdrafts, as well as to initiate payments on behalf of their small business users. We've compiled some useful reading below to navigate this space. Open Banking Limited is the organisation responsible for developing the open banking standard. Visit their website for more information on the background to open banking.