Why We’re Running An Open Banking Prize

From early 2018, “Open Banking” will be a reality in the UK. Most small businesses will, for the first time, be able to share their banking data securely with trusted third parties via API, and allow providers other than their bank to make payments from their account. It’s the most ambitious scheme of its kind anywhere in the world, and could lead to a revolution in UK retail banking.

The Open Up Challenge is a new challenge prize run by Nesta situated at the forefront of this open banking transformation. We’re inviting talented teams from across the world – fintechs, data scientists and others – to take this unique opportunity to develop next-generation services, apps and tools that create game-changing value for UK small businesses. In doing so, our goal is to drive greater transparency, choice and innovation for small business customers.

Challenge participants will receive a comprehensive package of support – including unprecedented access to cutting-edge data – to help them develop tools that transform how small businesses discover, access and use business-critical financial products like current accounts, loans and overdrafts.


What could these new tools look like to small businesses?

  • They might include an easy-to-use service that recommends a better value loan or overdraft facility by scanning the market in real-time, based on the business’s unique transaction history.
  • Perhaps the tool could populate a loan application on the business’s behalf, and go ahead and make the switch, seamlessly.
  • Going further, a tool could recommend, based on the business’s financial behaviour, that rather than use a credit card each month, it might adopt a better value type of financing –like an invoice financing provider – and sets it up with the best one for the job.
  • Or a tool that integrates with the business’s accounting software to do its accounts more or less automatically, complete its tax return and help it stay abreast of its tax liability. It may even use machine learning and Artificial Intelligence to predict potential problems, warn the user about an impending cash flow shortfall or a big shock like rising energy prices that might affect supply chain costs, and help get the necessary protections.

The Challenge was selected by the Competition and Markets Authority (CMA) as one of a package of remedies aimed at shaking up retail banking.


What is a challenge prize?

The Open Up Challenge is run by Nesta’s Challenge Prize Centre, through Nesta’s wholly owned subsidiary Nesta Enterprises Limited. The prize is backed by the 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.

Nesta is a global innovation foundation with a mission to spark and shape new ideas to improve how the world works for everyone. Within Nesta, the Challenge Prize Centre uses prizes to stimulate innovative solutions to some of the biggest challenges we face. The Challenge Prize Centre is behind successful initiatives including the Longitude Prize and the UNDP Renewable Energy Prize.

Challenge prizes are a simple idea. A problem or opportunity is identified, the challenge is publicised and rewards offered to those who can deliver the best solutions. Challenge prizes harness the ingenuity of people with the right knowledge and expertise to tackle them.

The Open Up Challenge brings this proven model to data-driven innovation for small businesses. It builds on Nesta’s extensive activity at the cutting edge of fintech and data science thought leadership:

  • Nesta’s pioneering research on alternative finance in the UK, beginning in 2010, preceded that industry’s rapid growth to become a mainstream source of finance for UK small businesses.
  • The Open Data Challenge series comprised seven prizes to generate innovative and sustainable solutions to social challenges using open data.
  • Tech Nation 2016 used cutting edge data techniques to map the UK’s tech entrepreneurship ecosystem.
  • Nesta has been campaigning for many years to promote digital making and coding skills, promoting computer science in the curriculum, and code clubs of all kinds.