FUNDING Circle has been named as one of the winners of the Open Up Challenge, a prize fund for fintechs that have used Open Banking to tackle problems faced by small businesses.
The competition is run by global innovation foundation Nesta and aims to encourage the development of new fintech products using the data-sharing initiative.
Peer-to-peer business lender Funding Circle is joined by five other winners: small- and medium-sized enterprise (SME) finance aggregator Funding Options, business current account Coconut, cashflow management software Fluidly, banking products comparison service OpenWrks and SME funding comparison site Swoop.
The winners were chosen out of 25 technology companies that have collectively been awarded £4.5m in funding through the Open Up Challenge between 2017 and 2018. These six chosen fintechs will receive an additional £200,000 to take their products and services to market.
Among the 25 companies that have received funding from the competition are money management app Bud and P2P lender Growth Street.
The Open Up Challenge is backed by the Competition and Markets Authority (CMA) with funding from eight of the UK’s largest providers of SME banking – Barclays, HSBC, Lloyds Banking Group, RBS, Santander, AIB Group UK, Bank of Ireland UK and Danske Bank.
Open Banking, which mirrors the EU’s Revised Payment Services Directive, mandates banks to share anonymised customer data with approved third parties to encourage innovation and competition.
“The Open Up Challenge is proof that ambitious, well-designed regulatory reform can be a driving force for innovation that puts real solutions in the hands of small businesses,” said Chris Gorst, challenge prize lead at Nesta.
“Since 2017 the companies we’ve backed have been building a quiet revolution, transforming how small businesses find the best bank accounts and loans, manage cashflow, reduce financial admin and trade with one another.
“These tools are easier than ever to use and, as our winners show, they are quickly growing popular with small businesses. We are confident that 2019 will be a tipping-point in the emergence of a new, more customer-focussed financial services market in the UK.”
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“We have seen some extremely innovative ideas as part of this competition, which we believe will help drive further improvements in small business banking and go to the heart of what we wanted to achieve when we set up this competition,” said Bill Roberts, head of Open Banking at the CMA.
“I greatly look forward to seeing the winners’ exciting new products be developed in the years ahead.”