Seven fintech firms join forces with Nationwide to address financial capability issues

EXCLUSIVE. An initial seven fintechs have been chosen within the Nationwide’s Open Banking for Good (OB4G) challenge. The winners, selected from 50+ applicants, will develop or build on existing open banking based apps and services to help financially vulnerable people.

OB4G came out of the Inclusive Economy Partnership (IEP), a UK government-led alliance of businesses, civil society and government departments seeking to solve some of society’s toughest challenges.

The OB4G scheme is backed by a £3 million fund from the UK building society. Partners include Money Advice Trust, Citizens Advice, The Money Charity, Money and Mental Health Policy Institute, Accenture, Doteveryone and Nesta. These will provide advice to the chosen fintechs, while Bristol University’s Personal Finance Research Centre will monitor the programme and its outcomes.

The fintechs fit into three categories. For the Income and Expenditure category, the chosen two were Openwrks, which has a platform for sharing financial information, and open banking artificial intelligence specialist, Ducit.ai. For “Income Smoothing”, Trezeo and Flow were selected. Trezeo has an account offering for self-employed people; Flow focuses on financial planning for women. And for the third category, Money Management and Help, the winners were Toucan, Squad and Tully, which all have existing or emerging financial planning and management apps.

When selecting the fintechs, there were a number of attributes that were sought, says Rachael Sinclair, Nationwide’s OB4G Programme Leader. The selection was carried out by a panel, which included the charity partners. There was a requirement for digital propositions that would utilise the opportunities of open banking and would fit into one of the three categories. Sinclair says “income smoothing” stemmed from research by Money Advice and conversations with charities about the particular issues faced by people with irregular income, such as those on zero-hour contracts and in the “gig economy”.

Another consideration within the selection was to have solutions at different levels of maturity. She describes the likes of Openwrks as fairly established, whereas some of the others, such as Toucan, were at an earlier ideas stage. There were also “some softer sides of the engagement”, she adds, which was to ensure those selected were aligned with the social purposes of the initiative.

The first three months of the programme are focused on “Explore and Develop”. Although the results of the selection have only recently been announced, there has been work with the seven in the first few months of the year within this explore phase.

It seems clear that different fintechs will move at different speeds, with Openwrks, for instance, moving relatively swiftly into the next Accelerator phase, which is anticipated to run for six months to further develop and build out the solutions. This phase starts with a three month lab run with Accenture and then three months focused on scaling the solutions across Nationwide’s membership and into the wider society.

“At this point in time, we can’t really say if all of the applications will make it [to launch],” says Sinclair. However, the aim is for them to be released via the Nationwide’s own digital channels and – where appropriate – its branch network, as well as to the wider market. The scheme is not for commercial gain, Sinclair points out, but for a social benefit, so the solutions should be available via other institutions including, where relevant, third-sector partners.

It is estimated that one in four households in the UK (12.7 million people) are struggling financially (The Financial Capability Strategy for the UK, Money Advice Service, October 2015).

The Nationwide was approached by the IEP early last year, says Sinclair, and the discussions about financial inclusion took into consideration the major opportunities now being presented by the UK’s open banking. “We should recognise that this is one of the greatest moments of transformation in financial services,” she says.

In terms of raising public awareness of the potential, Sinclair feels “getting solutions into the hands of people who need them” will go a long way in this. “Only then can we prove the value of them.” In terms of building confidence, Nationwide is setting up a data ethics committee supported by Innovate Finance, an independent membership association that represents the UK’s global fintech community.

It is too early to say whether additional fintechs will be selected at a later stage. There is the current phase to run, says Sinclair, but conversations have started within OB4G about future phases and with the IEP about further collaboration.