The past 10 years have seen an explosion of investment in fintech, with businesses such as Funding Circle (P2P lending), Transferwise (money transfer), Monzo, Revolut (consumer banking), Tide (SME banking) and Iwoca (SME lending) bringing innovation to every kind of financial service.
This is good news for consumers. Successive governments have found the UK banking market to be uncompetitive and slow to innovate. These investments are bringing much-needed diversity and innovation to the market. The UK’s buoyant fintech scene is a notable UK success story that many countries are keen to emulate.
But another long standing problem in UK banking - financial inclusion - risks being left untouched by these innovations. The figures remain stark:
The UK’s buoyant fintech scene is a notable UK success story that many countries are keen to emulate
There are grounds for optimism. Open Banking and other digital technologies provide new, scalable tools that could finally reverse these statistics. But this will not happen spontaneously - with so many commercial opportunities available, there is a need to incentivise the best innovators to use these technologies to focus on financially excluded citizens.
Public power, private money and entrepreneurial innovation have not been brought together around this problem before. We want to unlock the potential for this technology to be used to drive good outcomes for low and middle income families.
Nesta has been at the forefront of incentivising innovation through our Open Up Challenge in SME banking. Our experience running Open Up has convinced us that there is a unique opportunity now to make Open Banking for good a reality:
Nesta has partnered with government, civil society, fintech innovators and the private sector to work together to build a more inclusive economy through our Inclusive Economy Partnership innovation programme. Through the Inclusive Economy Partnership we have brought together a diverse group of stakeholders to shape an innovative approach to tackling societal challenges.
Nesta are excited that Nationwide Building Society have announced an Open Banking for Good challenge. Launching in September, Open Banking for Good will convene some of the brightest minds in established fintechs and start-ups, through to innovators, and debt and money charities. The selection panel members include Nesta, Money Advice Trust, Doteveryone and Accenture.
Nesta are excited to be part of the team delivering on this and want to support other initiatives that use #techforgood.