If you have questions about the Affordable Credit Challenge which are not answered in the FAQs or elsewhere on this website, please contact us by emailing firstname.lastname@example.org.
What is the Affordable Credit Challenge?
The Affordable Credit Challenge supports partnerships between UK community lenders and fintechs to develop innovative technological solutions that will increase access to affordable, responsible credit. It is backed by HM Treasury and delivered by Nesta Challenges,
We will award development grants to six community lender/fintech partnerships. In addition, three of these partnerships winning further cash prizes in Spring 2020.
What are the objectives of the Affordable Credit Challenge?
The ultimate objective of the Challenge is to widen people’s access to responsible, affordable credit provided by community lenders.
To help achieve this, the Challenge is supporting partnerships between community lenders and fintechs who are working together to use technology to address challenges or opportunities faced by community lenders.
What are the key dates for the Challenge?
31 July 2019: Affordable Credit Challenge opens for applications
30 September 2019 (8am): Applications close
November 2019: Participating partnerships announced, Development Grants awarded
November 2019 – March 2020: Partnerships work on their solutions
March 2020: Winning partnerships selected
Who is eligible to apply for the Challenge?
The Challenge will be open from 31 July to joint applications from partnerships comprising:
- At least one UK community lender (e.g. a credit union, Community Development Financial Institution (CDFI) or other responsible lender); and
- At least one fintech.
For full details regarding eligibility, please see the Eligibility Criteria.
How many community lender/fintech partnerships will participate in the Challenge?
We will award development grants of between £125,000 to £150,000 to up to six community lender/fintech partnerships in November 2019.
What will the Challenge offer to successful partnerships?
From the six partnerships chosen to receive development grants, three winning partnerships will each receive cash prizes of at least £200,000 in Spring 2020.
The size of development grants and prizes will not vary depending on the number of organisations participating in the partnership.
How will participating partnerships and winners be selected?
We will appoint an independent, expert Judging Panel to advise HM Treasury on selecting the six participating partnerships. After that, we will advise them on selecting the three Challenge winners from among these. We will announce who is on the Judging Panel before applications to the Challenge close.
The Judging Panel will make its decisions based on the Challenge Assessment Criteria.
Can partnerships of more than one community lender and/or fintech apply to the Challenge?
Yes. In other words, a partnership can include more than two organisations, but must include at least one UK community lender and one fintech.
The size of development grants and prizes will not vary depending on the number of organisations participating in the partnership.
Can a community lender or fintech apply on its own to the Challenge?
No, you must apply as a partnership which includes at least one community lender and at least one fintech.
How do we find and select a community lender or fintech partner?
The Challenge invites joint applications from community lender/fintech partnerships. The community lender and fintech will need to commit to work together to develop their proposed solution, if they are selected to participate in the Challenge. We encourage community lenders and fintechs to reach out to potential partners at the earliest opportunity.
We are also providing support to help community lenders and fintechs find potential partners, based on complementary needs and capabilities. Please see the Partnering Page for more details.
Can I already be speaking with potential partners about submitting an application?
Will we be told which problems or opportunities we should work on?
No. From our research with community lenders, it’s clear that they have a range of different priorities. In addition, they have good insight into the challenges and opportunities they face in serving existing and new customers.
However, we have defined a set of Problem-Opportunity Statements. These try to capture the most common challenges that community lenders face. These have been created through engagement with both community lenders and fintechs, via outreach, research, surveys, interviews and workshops.
These Statements create a shared understanding of the challenges and opportunities in widening access for affordable, responsible credit. Above all, the purpose of these Statements is to encourage conversations between community lenders and fintechs. Partnerships applying to the Challenge will have the option to propose a solution falling under one of these Problem-Opportunity Statements, though they will not be limited to these.
What kinds of solution is the Challenge looking for?
We are looking for partnerships applying to the Challenge to specify the solution they intend to develop if they are selected as a participant.
The Judging Panel will select six partnerships and their proposed solutions based on the Challenge Assessment Criteria.
Who will the development grants and prizes be paid to? How will these be split between the community lender and fintech partners?
Development grants and prizes will be paid to a community lender. As part of the application process, you are asked to identify a Lead Partner, which must be a community lender. Any funds will be paid to the Lead Partner.
It will be for the Lead Partner to agree with any other community lenders in the partnership and its fintech partner(s) how the funds will be divided.
What counts as a ‘community lender’?
For the purpose of the Challenge, community lenders includes regulated credit unions and CDFIs.
Other responsible lenders providing affordable loans may also be eligible. Please see the Challenge Eligibility Criteria.
If you’re not sure whether you are eligible, please contact us by emailing email@example.com.
What counts as a ‘fintech’?
For the purpose of the Challenge ‘fintech’ means a business operating in the financial services sector with advanced technological capabilities.
What counts as a ‘partnership’?
We encourage applications from community lender/fintech partnerships. We do not intend to specify what constitutes a ‘partnership’ for the purpose of applying to the Challenge, as we expect a range of different models and arrangements could be suitable.
However, as specified in the Assessment Criteria, the Judging Panel will be looking for evidence of commitment from both the community lender and fintech partners to work together on their proposed solution through the Challenge and beyond.
In forming a partnership, can we work with a partner (fintech or community lender) with which we have worked before or are already working?
Do you expect the partnerships to last beyond the end of the Challenge (March 2020)?
Yes. The Judging Panel will be looking to support partnerships that intend to continue to invest in their proposed solution beyond the end of the Challenge.
What are participating partnerships expected to have delivered by March 2020?
We recognise that the amount of development time for participating partnerships is relatively short and therefore full deployment of their solutions may not be possible by Spring 2020.
In deciding the three winners of the Challenge, the Judging Panel will be looking for demonstrable progress achieved by the participating partnerships in working together effectively and in developing and testing their proposed solutions. The Judging Panel will be interested in evidence of the partnerships’ trajectory over the lifetime of the Challenge and beyond.
Is the Challenge looking for solutions that will apply across the community lending sector?
We know from our research conducted with community lenders that these face a wide range of challenges and opportunities. There are over 400 community lenders in the UK of varying sizes, with a wide range of technological capabilities, business models and with types of customer.
In the light of this, the Challenge is not seeking one-size-fits-all solutions. Rather, we hope to support a range of solutions that demonstrate how technology can help community lenders better serve their existing and potential customers and widen access to affordable, responsible credit.
However, consistent with the Assessment Criteria the Judging Panel will look favourably on solutions that have wider applicability in the community lending sector, rather than solutions that are only narrowly relevant to the participating community lender(s).
What counts as an “innovative” solution?
The Challenge welcomes applications for genuinely new solutions, for example new approaches specifically tailored to better serving the needs of financially vulnerable customers.
But it will also welcome new applications in the community lending sector of technology that is already in use in other contexts.
The Challenge is not seeking to support solutions that are already widely adopted in the community lending sector (for example, basic website development).
What will happen to IP developed by the partnership?
Neither HM Treasury nor Nesta Challenges will seek any interest in the IP developed with the support of the Challenge.
It will be for the participating partnerships to determine rights to IP developed with the support of the Challenge.
We are very conscious of the importance of protecting the confidentiality and intellectual property rights of participants, and ensure that we have suitable provisions in our agreements with any third parties, such as the Judging Panel. These agreements state that third parties may only use the information made available within participant applications to the extent necessary to perform their agreed role or service. Third parties may not use participant IP or other information for any other purpose, and are required to treat all participant information confidentially.
Are affordable, responsible business loans in scope for the Challenge?
The Challenge’s mandate is restricted to unsecured personal loans. If you’re a community lender providing both personal and business loans, you are eligible to apply, but you’ll only be assessed in relation to your unsecured personal lending. If you’re a community lender who provides only business loans, unfortunately you will not be eligible for this Challenge.
Is mortgage lending in scope for the Challenge?
The Challenge’s mandate is restricted to unsecured personal loans. If you’re a community lender providing both unsecured personal loans and mortgages, you are eligible to apply, but you’ll only be assessed in relation to your unsecured personal lending. If you’re a community lender who provides only mortgages, unfortunately you will not be eligible for this Challenge.
Are we eligible to apply if we provide responsible, affordable loans to sole traders, freelancers or small businesses?
The purpose of the Affordable Credit Challenge is to support innovations that will increase access to responsible, affordable alternatives to high cost credit. For the most part this means providing unsecured personal loans for personal use. “Personal uses” include paying for individual/household living costs or funding major consumer purchases.
- If your focus is supporting sole traders, freelancers or small business owners to pay these personal/household outgoings, you are eligible for the Challenge.
- If your focus is helping sole traders, freelancers or small business owners get business financing at more affordable rates than other business lenders offer, you are not eligible for the Challenge.
- Likewise, if your focus is helping sole traders, freelancers or small business owners get business financing after they have been declined by other business lenders, you are not eligible for the Challenge.
There is, however, one “business” purpose which is eligible for the Challenge. There may be a market of sole traders, freelancers or small business owners who turn to high cost “payday” loans to fund business costs. This could be because they can’t get a business loan, or they can’t get a personal credit card, or they have maxed out their personal credit card. As the spirit of the Challenge is to support alternatives to payday loans, we will consider solutions designed for this market to be eligible.
You will need to show that your solution will be designed specifically for sole traders, freelancers or small business owners who have turned (or at risk of turning) to high cost payday loans to fund business costs. Your solution may also be designed to help these groups avoid the need to use a personal credit card to fund their business costs. We recognise that personal credit cards are an expensive way to fund a business and lower cost alternatives to personal credit cards are important. That said, the Judges will assess your application primarily in relation to your impact preventing sole traders, freelancers or small business owners from using the highest cost forms of credit to fund their businesses, such as payday loans with APRs that are often well over 1,000%.