Innovation foundation Nesta, with the backing of the Competition and Markets Authority, has announced a new £5m challenge prize to develop products to aid SMEs – and the prize winners may be SMEs too.

Open Up ChallengeNesta’s Open Up Challenge

Nesta’s ‘Open Up’ Challenge is targeting ‘talented teams from anywhere in the world’ to develop ‘next-generation services, apps and tools that help UK small businesses get game-changing value from their banking services’. These projects will be part of the ‘open banking’ revolution that Nesta predicts will see SMEs sharing banking data with third parties via secure APIs.

The Open Up Challenge is run independently by Nesta’s Challenge Prize Centre, with backing from the CMA and funding from eight of the UK’s largest providers of SME banking – Barclays, HSBC, Lloyds Banking Group, RBS, Santander, AIB Group (UK) plc., Bank of Ireland UK and Danske Bank.

Nesta envisages that these projects could include services and tools that:

  • search the market in real-time for overdraft and loans
  • complete loan applications and seamlessly switch the applicant to another loan
  • recommend better and/or alternative finance providers (for example, find invoice financing providers offering a better, more appropriate deal tan a credit card)
  • integrate with business accounting software to automatically complete tax returns and update accounts, predict potential problems, warn the user about an impending cash flow shortfall or rising prices that might affect supply chain costs.

Worthy Winners

Nesta are looking for 20 winning entries to win a share of the £5 million prize fund – and those winners could well be SMEs themselves.

‘You can be a startup, a lone developer or an established company from anywhere in the world, and you may have started work already or still be at idea-stage by the time you apply,’ says the Nesta statement.

The Open Up Challenge prize has two stages. Stage 1 (innovation) is aimed at ideas or early-stage concepts that promise to deliver the most benefit to small businesses. Stage 2 (market ready) focuses on entries that are, or will shortly be, market-ready and have solid business models.

All winners will receive exclusive early-stage access to Nesta’s sandbox, containing the largest anonymised UK banking transaction dataset ever released, and APIs aligned with the forthcoming open banking standard. They can use this to securely build and test their product. They’ll also receive technical support from leading practitioners, including legal and regulatory considerations, data and user experience advice, to help them get market ready.

In the innovation stage, they will get a £50k grant upfront as a development grant, and then share in a £1m reward pot if they’re one of up to 10 successful Stage 1 prize winners. Successful entrants to the Stage 2 market ready stage will get a development grant from a pot of £500k for up to 5 teams, plus a share of a £2.1m pot if they are one of the final three Stage 2 prize winners.

Mike Cherry, National Chairman of the Federation of Small Businesses, said: “Accessing the right banking products and managing finances is often seen as a complicated task for small business owners and one that takes up a disproportionate amount of their time. The Open Up Challenge has the potential to change all that. If we can genuinely support small businesses, both in terms of saving them time and providing them with access to the right financial products and services, then we have the opportunity to bring something game-changing to the economy.”

Are You Up For the Challenge?

If you’re interested in entering the challenge, applications are already open. The closing date for applications is 31st May 2017. You can find out more about the prize and how to apply by visiting the Open Up Challenge Prize webpage.