Nesta Launches Open up challenge 2020 to encourage open banking innovation for consumers:
- New research reveals 15.2 million regularly run out of money each month and 52% want to feel more in control of their finances
- Half of people want new tools and apps to help them manage their money – such as those being enabled by open banking
- Nesta Challenges and Open Banking Limited are partnering to launch a £1.5m prize fund encouraging fintech innovators to create solutions which help people make more of their money
Nesta Challenges has launched Open Up Challenge 2020 – a £1.5 million prize fund, run in partnership with Open Banking Limited, to encourage fintech innovators to create open banking enabled solutions which help consumers across the UK make more of their money.
Research conducted to mark the launch of Open Up 2020 has found that millions of people across the country are currently struggling to stay on top of their finances. One in three (29%) say that they regularly run out of money each month – equating to around 15.2 million people.
The survey also found that half (52%) want to feel more in control of their finances and nearly four in ten (37%) know they could get a better deal for their financial products but don’t know where to start.
Open banking allows people to get personalised, tailored information to help them manage their money by giving consent for regulated companies to securely analyse their bank data. Products and services powered by open banking are beginning to show how people can revolutionise their finances through better budgeting, managing debt, automating savings, and making it easier to compare products. Half (48%) of people say they would like new tools and apps to help them manage their money and Open Up 2020 is designed to incentivise innovators to accelerate the development of these tools even further.
The study also suggests that these products and services could be particularly helpful for the most vulnerable in society or those who are not financially resilient. Nearly nine in ten (86%) people who have already used a product enabled by open banking think it would help people who are financially vulnerable to manage their money, and almost eight in ten (77%) believe that those struggling financially or on lower incomes need to be better supported to make more of their money.
There is clearly an appetite among lower income households for this type of support, with over a third (35%) of those earning £20,000 or less saying they would use an app that helped them manage their money. The areas that lower earners are most likely to want help with are: saving money on bills (25%), saving more money automatically (21%) and helping identify savings on lifestyle costs (17%).
Open Up 2020 will accelerate innovation in this space by offering financial prizes and expert support to the most impactful solutions which use open banking data to help people – particularly those struggling financially – to make more of their money. It follows the successful Open Up Challenge 2018 which focused on improving the financial products and services available for small and medium-sized businesses.
Chris Gorst, Head of Better Markets, Nesta Challenges, said:
“For many people, managing their finances can be confusing, time consuming and stressful. But new digital tools are being developed to take the pain out of this process and it’s vital that as many people as possible can benefit from these solutions.
“Open banking is the biggest change in this sector since online banking and, with millions of people across the country struggling to keep on top of their finances, now is the time to ensure genuinely helpful products and services are able to come to market. Open Up Challenge 2020 will offer financial prizes and expert support to the most impactful solutions which help people – including the most vulnerable – take control of their money and make the most of it.”
Imran Gulamhuseinwala OBE, Trustee of the Open Banking Implementation Entity (OBIE), commented:
“People can access their banking data and make payments easily and securely through Open Banking so that their hard-earned money works even harder for them. With banks approaching their implementation deadline for Open Banking in September, Nesta Challenge’s Open Up Challenge 2020 encourages and incentivises innovators to create even more products through Open Banking that will make a real impact on people’s financial wellbeing and wallets.”
Open Up Challenge 2020 opens for applications today and closes on 2 October 2019. To find out more visit: openup.challenges.org
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Methodology: Opinium, on behalf of Nesta Challenges, interviewed 2,004 UK adults between 9 and 15 July 2019. Data has been weighted to nationally representative standards.
15.2 million figure calculated based on 29% of ONS mid 2018 population estimate of 52,383,965 people aged 18 and over in the UK.
About Nesta Challenges
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, 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 Limited:
1. Open Banking Ltd 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 banking has the potential to revolutionise financial services, transforming and opening up the UK banking industry by giving people control over their financial data in order to access innovative products tailored to them. Since it launched in 2018, open banking technology has opened the door for new fintech innovators to create cutting-edge tools for everything from budgeting, debt management, comparing/switching banks, automating savings, and more.
The UK is the acknowledged world leader in open banking, with many other countries – including Australia, Canada and the rest of the EU – now implementing similar initiatives.
This wave of innovation holds particular promise for people partially or entirely excluded from access to fair financial services, including:
• the 1.5m UK consumers who don’t have a bank account*
• the 1m+ consumers every year who need debt advice*
• the 50%+ of consumers who are not confident making financial decisions
More generally, it is estimated that UK consumers stand to gain £12bn from open banking-enabled tools.*
With applications opening in July 2019, Open Up 2020 is designed and timed to boost consumer awareness and adoption of open banking-enabled products by:
• providing 12 to 15 winning 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.
* Consumer Priorities For Open Banking, June 2019