Why are we doing this?
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 open banking APIs, and allow third parties to initiate payments on their behalf. It is the most ambitious scheme of its kind anywhere in the world, and could lead to a revolution in UK retail banking.
At the forefront of open banking, the Open Up Challenge is a new challenge prize by Nesta that will use this unique opportunity to shape a future for small business banking characterised by greater transparency, choice, quality and innovation.
We're challenging talented teams from anywhere in the world to take this unique opportunity to develop next-generation services, apps and tools that help UK small businesses get game-changing value from their banking services.
What could these new tools look like to a small business owner?
- 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 prize was selected by the Competition and Markets Authority (CMA) as one of a package of remedies aimed at shaking up UK retail banking.
What are we doing?
We’re looking for 20 winning entries from anywhere in the world that will use open banking APIs - newly available from early 2018 - to create game-changing value for the UK’s five million small businesses, including in how they discover, access and use bank accounts, loans and overdrafts.
The prize has two stages. Stage 1 (innovation) is aimed at credible ideas that promise to deliver the most benefit to small businesses, and entries can be at an early stage or even just an idea. At Stage 2 (market ready) we’ll focus on entries that are, or will shortly be, market-ready with solid business models underpinning them.
You can be a startup, a lone developer or an established company from anywhere in the world, and you may have started work already or still be at idea-stage by the time you apply.
In total, the challenge has a £5m prize fund to allocate to winning entries.
- Cash awards. In the innovation stage you’ll get a £50k grant upfront as a development grant, and then share in a £1m reward pot if you’re one of up to 10 successful Stage 1 prize winners. If you successfully enter the market ready stage you’ll get a development grant from a pot of £500k for up to 5 teams, plus a share of a £2.1m pot if you are one of the final three Stage 2 prize winners.
- Exclusive early-stage access to data. You’ll get access to our sandbox, containing the largest anonymised UK banking transaction dataset ever released, and APIs aligned with the forthcoming open banking standard. Use the data sandbox to securely build and test your product so you can hit the ground running in 2018.
- Technical support. You’ll be able to flexibly access technical support provided by leading practitioners - covering legal and regulatory considerations, data, user experience and more - to help you get market ready.
The Open Up Challenge brings this proven model to data-driven innovation for small businesses. It builds on Nesta’s extensive experience at the cutting edge of innovative finance, technology and data:
- 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 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.
The Open Up Challenge is run independently by Nesta's Challenge Prize Centre, with backing from the CMA and 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.