A national competition that challenges firms to deliver digital services aimed at helping those struggling with their money has been launched.

Nationwide Building Society’s Open Banking for Good challenge (OB4G) will see fintech organisations and academics work together to develop Open Banking apps and services that make a real difference to people’s lives, particularly those considered most financially vulnerable.

It launches with a £3 million fund from Nationwide to drive the programme and encourage participation. A wealth of expertise will be on hand to support firms during the challenge; these include Nationwide, Money Advice Trust, Accenture, Nesta and Doteveryone – the charity and independent think tank focussed on responsible technology.

The launch is reinforced by a new report showing the scale of the financial capability challenge in the UK. As part of the Inclusive Economy Partnership – a collaboration between business, civil society and government and facilitated by Nesta, the innovation charity- OB4G aims to bring organisations together to create scalable solutions to widespread financial capability issues using the functionality of Open Banking.

Open Banking, launched in January 2018, was introduced to increase competition in the financial services sector, leading to better outcomes for consumers by allowing third parties to offer a myriad of services on behalf of established banks and building societies. Motivated by Nationwide’s social purpose, the OB4G programme places a premium on innovators being challenged to use Open Banking for social good, as well as financial good, and for the benefit of everyday people, not just Nationwide members.

At an event in Westminster today, Joe Garner Nationwide CEO revealed a report that identifies the three areas where there is the biggest opportunity to improve the UK’s financial capability through Open Banking. The joint report between Nationwide and Money Advice Trust shows the value that can be achieved when working in conjunction with specialist debt support organisations. The issues identified in the report are those that applicants to the OB4G challenge will be asked to engage with. They are:

Income and expenditure: Nationwide receives over 5,000 calls a month from members who are approaching financial difficulty. 500 of these members are referred to debt advice charities. According to Money Advice Trust it can take up to 20 minutes and sometimes longer to complete a draft income and expenditure statement and some of the information may be wrong or missing. Creating an income and expenditure profile can be a complicated and time-consuming process and automating this through Open Banking could make it faster and more accurate.

Income smoothing: Those who are self-employed, or members of the gig economy, can experience fluctuating incomes. Nationwide data revealed over 60,000 members receive substantial income from the gig economy. This includes over 5,000 ‘gig drivers’ who are almost three times more likely to have used an unauthorised overdraft and almost three times as likely to be within five per cent of their credit card limit. Open Banking could help people manage these fluctuations.

Money management and help: Almost three in five of members agree that text alerts are a useful tool for managing their finances. Since starting to issue these notifications, 12 per cent of accounts that were previously incurring unarranged overdraft fees avoided unarranged fees entirely. Where these fees cannot be avoided, Nationwide has seen an 8 per cent fall in the average number of fees incurred. Open Banking could create more innovative money notification tools to prevent financial difficulty.

The challenge

Nationwide is inviting fintechs and academics to apply for the OB4G challenge. The four distinct application paths are suitable for applicants whose concepts are at various stages of maturity. Whether they have a great idea that needs exploration and development, or they have a tried and tested product that needs investment to help scale it up, there’s an application path to suit.

  1. Explore: For concepts that are not clearly defined but contain the kernel of a great idea. Nationwide will work with applicants to explore if it can be developed into a testable concept and enter the Develop path.
  2. Develop: For well-understood concepts with a clear development and testing approach. The duration of this scheme is three months and the funding available will provide half of the person-hour cost for the duration of the scheme.
  3. Accelerate: For ideas that are fully formed but are neither fully developed or tested. This pathway lasts for six months and support will include providing access to a team space and incubation team, access to additional skills such as design or technical capabilities as required, access to users for exploration and evaluation, along with full funding of the person-hour cost.
  4. Invest: For applicants that have built and tested their product and are at the stage of seeking investment and a ready user base. This will be handled on a case-by-case basis.

Joe Garner, Nationwide’s Chief Executive, said: “As a mutual we believe in the power of collaboration; that we achieve more together than we can alone. We believe Open Banking presents a huge opportunity to help everybody with their money – not just the affluent or technically literate. We’re looking for innovators to come forward with ideas to help people living on a financial knife edge – with little by way of savings or relying heavily on credit. If entrepreneurs, innovators, charities and financial services work together, we could make a huge positive impact – and that’s what this is all about. “

Joanna Elson OBE, Chief Executive of the Money Advice Trust, said: “With more than eight million people over-indebted across the UK, debt advice charities are working hard to tackle a huge social problem – by providing free, independent and life-changing advice to people in financial difficulty. At National Debtline we are seeing our highest level of demand for telephone and online advice in five years – and all the signs are that this trend will continue.

“Whether in improving the debt advice process, helping the growing number of people with variable incomes or tackling the UK’s lack of financial capability – the potential for Open Banking to bring about positive social change is significant. We are looking forward to working with Nationwide, the fintech community and others to support this potentially game-changing competition.”

Oliver Dowden, Minister for Implementation, said: “The Open Banking for Good Challenge is a welcome addition to the wide range of projects emerging from the Inclusive Economy Partnership, which sits at the heart of government’s promise to create a stronger economy and a fairer society.”

“The challenge is an excellent example of how the Partnership can help some of the millions of UK households who have no savings or rely heavily on credit. I look forward to seeing how we can continue to work with smaller organisations and smart tech solutions to harness the power of big ideas, for the benefit of everyone.”