To mark the beginning of Debt Awareness Week, research from the Open Up 2020 Challenge reveals one in four (27%) people feel uncomfortable about their current level of debt, yet often don’t know what to do about it.

It’s no secret that UK households are dependent on credit, with Financial Conduct Authority data revealing over three quarters (78%) of all UK adults hold at least one credit or loan1. In many cases, this use of credit is due to people struggling to make ends meet. In fact, four in ten (40%) 18-34 year olds say they regularly run out of money each month, with 34% of 35-54 year olds agreeing. In addition, a third (29%) of people don’t have a ‘rainy day’ savings fund, which can leave people reliant on credit for any unexpected bills.

In light of this financial strain, it’s no surprise that six in ten (57%) want to feel more in control of their money. Yet, 39% are unsure where to turn to for help with financial issues including debt. Open banking offers people the chance to get personalised, tailored support to help them manage their money by allowing regulated companies to securely analyse their bank data. There is a range of products available that use open banking to help people better manage and clear their debt, provide support to make financial plans, increase their financial well-being, reduce their uncertainty from one month to the next and throw them a lifeline at times of crisis e.g. self-isolation.

Two open banking apps to help people take control of their debt are:

  1. Tully – a digital debt adviser for those struggling financially – providing online budgeting, debt advice, flexible repayments and money coaching to alleviate financial stress.
  2. Updraft – a solution which automates day-to-day decisions involved in managing money, designed to help millennial users clear their overdraft, pay off credit cards and save more.

In addition, there are open banking tools which offer alternatives to high-cost, short-term loans:

  1. Cleo – a financial assistant with a sense of humour, personality and intelligence that is already empowering over 3 million customers to reach their financial goals. As part of a broad range of services, Cleo offers up to £100 interest-free salary advance to help its customers avoid excessive bank charges.
  2. Creditspring – a credit membership service that provides loans and tools to build your financial stability without stress. You’ll get a boost to your spending when you need it, and peace of mind when you don’t.
  3. Portify – a holistic credit builder for modern workers with unconventional earnings patterns, Portify’s solution analyses these earnings and spending behaviours to offer a fee-free credit line, build users’ credit history, and prevent overdraft and interest payments.
  4. Wagestream– working with leading employers to enable employees to stream a percentage of their earned wages throughout the month, sparing them from using loans, overdrafts and payday lenders. They can draw down earned wages using the Wagestream app for a flat fee of £1.75, as well as track wages, get impartial financial education in real-time and start a savings pot.

All of these solutions are finalists in the Open Up 2020 Challenge, run by Nesta Challenges in partnership with the Open Banking Implementation Entity. There are 15 finalists in total which have already received £50,000 in funding in addition to non-financial support to help them further develop their product. Between three and four finalists will go on to be named winners in July 2020, receiving a further £150,000 -200,000 each so they can help even more people to manage their money.

Lubaina Manji, Senior Programme Manager, Nesta Challenges, said: 

“It’s no secret that people in the UK are heavily reliant on forms of credit – whether loans, car finance, or credit cards. But with so many people worried about their level of debt and wanting help to take control of their finances, especially in the current environment, it’s important people are aware of the tools and apps that are available to help them. Through Open Up 2020, Nesta Challenges is excited to be supporting innovators bring to life exciting ideas that have the potential to truly transform people’s relationship with money.”

The research also found that nearly half (47%) of people like the idea of using apps and tools to manage their money.

Imran Gulamhuseinwala OBE, Trustee of the Open Banking Implementation Entity, commented:

“There are a wealth of innovative products coming soon that use open banking data to help people manage their finances – whether that’s through finding ways to clear debt, better budgeting, or automating savings. The Open Up 2020 Challenge is designed to encourage even more of these ideas and to help millions more people across the UK take control of their financial situation.”

For more information about Open Up 2020, and the full list of finalists, visit openup.challenges.org/

-ENDS-

Notes to editors:

For all media enquiries contact:

Robyn Margetts, robyn@seven-consultancy.com OR Emma Harvey, emma@seven-consultancy.com

  1. According to the FCA’s Financial Lives Survey 2017.

Methodology: Opinium, on behalf of Nesta Challenges, interviewed 2,000 UK adults between 30 December 2019 and 2 January 2020. Data has been weighted to nationally representative standards.

About Nesta Challenges

Nesta is an innovation foundation. For us, innovation means turning bold ideas into reality and changing lives for the better.

Within Nesta, Nesta Challenges uses challenge 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 are offered to those who can deliver the best solutions.

Nesta Challenges’ Better Markets team works with regulators, policymakers and innovative enterprises to make markets more competitive and open. We advise regulators and policymakers how regulatory reforms and targeted public investment programmes can work together to achieve greater impact.

About Open Banking Implementation Entity

  1. Open Banking Ltd (trading name) was set up by the Competition & Markets Authority (CMA) in September 2016 to fulfil one of the remedies mandated by the CMA following an investigation into UK retail banking.
  2. The CMA’s investigation into the retail banking market (whose findings were published in August 2016) concluded that older and larger banks do not compete hard enough for customers’ business and that Open Banking should deliver a new, secure option for customers to be able to compare the deal they are getting from their bank.
  3. Open Banking was created to enable innovation, transparency and competition to UK financial services. It is tasked with delivering the Application Programming Interfaces (APIs), data structures and security architectures that will make it easy and safe for customers to share their financial records by January 2018.
  4. The data provided by Open Banking will enable developers to harness technology that allows individuals and businesses to share their financial records held by their banks with third parties.
  5. Open Banking is a private body; its governance, composition and budget was determined by the CMA. It is funded by the UK’s nine largest current account providers and overseen by the CMA, the Financial Conduct Authority and Her Majesty’s Treasury.
  6. The 9 mandated institutions (referred to as the CMA9) are: Barclays plc, Lloyds Banking Group plc, Santander, Danske, HSBC, RBS, Bank of Ireland, Nationwide and AIBG.

About the Open Up 2020 Challenge

Open Up 2020 is run by Nesta Challenges and backed by the Open Banking Implementation Entity as part of the UK’s world-leading open banking agenda.

Open Up 2020 is designed and timed to boost consumer awareness and adoption of open banking-enabled products by providing 15 fintechs with up to £300k each, promoting their products in a national digital awareness campaign, and offering expert non-financial support so they can accelerate their solutions.