Most of us rely on borrowing of one form or another, whether loans, credit card debt or mortgages. But the inability to access fair and affordable credit is a challenge faced by millions of people across the UK. For instance, over 8 million people use credit to pay for everyday household expenses.
Credit unions, CDFIs and other community lenders offer an affordable alternative to high cost credit, such as payday loans. They comprise a significant market, making over £1 billion worth of loans annually and serving almost 2 million people. However, they compete with high cost credit providers with more resources and better access to technology. This means they can struggle to reach and serve all those who could benefit from their services.
Meanwhile, the UK’s world class fintech sector continues to flourish, challenging traditional business models in banking, payments, personal investing and small business lending to better serve customers.
We believe a better personal lending market is possible – with affordable credit available to more of those who need it – through combining the values and reach of the community lending sector with the insights and capabilities of fintech businesses.
The Affordable Credit Challenge supported partnerships between UK community lenders and fintechs to develop innovative technological solutions that increased access to affordable, responsible credit. It is backed by HM Treasury and delivered by Nesta Challenges,
We awarded development grants of between £125,000 and £150,000 to six community lender/fintech partnerships. From these, we selected three winning partnerships in Spring 2020 and each of these received cash prizes of at least £200,000.
What were we looking for?
The ultimate objective of the Challenge was to widen people’s access to responsible, affordable credit provided by community lenders. To help achieve this, the Challenge supported partnerships between community lenders and fintechs who are working together to use technology to address challenges or opportunities faced by community lenders. The Challenge supported a range of different solutions that demonstrate how technology can help achieve this goal.