Nesta Challenges launches £2m in prize money to increase affordability in the lending industry
Nesta Challenges have recently launched the Affordable Credit Challenge, in the hopes of creating incentive for community lenders and fintech companies to partner up and develop solutions to help improve affordability within the lending industry. The funding organisation has claimed that high-cost credit loans do have “a role to play in the market” however, “too many people have been turning to these lenders […] when it has not been appropriate for their own personal situation.” Whilst community lending and other not-for-profit lenders can provide a better means of borrowing for people in particular financial situations, studies have shown that many consumers either do not know how to apply through such lenders, and out of those that do, many are then put off by their lack of online presence.

What will the Affordable Credit Challenge bring to the lending industry?

The Affordable Credit Challenge is therefore trying to make such community lenders work together with fintech companies to help improve their online visibility and further accessibility, making those who could benefit from this form of lending be able to both find these organisations and feel comfortable applying for a loan with them. The head of Nesta Challenges’s Better Markets Chris Gorst has commented on their recent release of the Affordable Credit Challenge (having opened this Wednesday), claiming that “Technology is already transforming how we manage our money every day, but our trusted community institutions – like the local credit union – have fallen behind in the use of technology” “This means they often struggle to reach customers or compete with the speed and convenience offered by high-cost lenders. It’s now time for the fintech innovators to unite with social lenders and transform the personal lending market for the better” Mr Gorst further commented, concluding that: “We’re not only excited that the Affordable Credit challenge will accelerate much-need innovation in community lending, but that it will ultimately make it easier for people up and down the country to access safe, affordable and responsible credit when they need it.”

Who will be awarded money from the Affordable Credit Challenge?

As the project has been created to incentivise the collaborative innovation of community lenders and fintech companies, successful applicants will have to develop something that can make a significant impact on affordability within the lending industry. The challenge will award a total of six cash prizes to the best ideas. Applications opened this Wednesday and will shut on the 29th of September. City Minister John Glen has commented that he would like to see “more people benefit from the transformative power of digital technology”, claiming that this is the reason “why we have launched the Affordable Credit Challenge. This is a vital opportunity for fintechs to work with community lenders to give more people control over their money.”

What lending option is best for me?

The best lending option available for you will depend entirely on your situation. Whilst community lenders and other means of not-for-profit lending can be of a great help for those in the right financial situation, proper consideration and thorough assessment of what you both want and need from your borrowing is vital to ensure you get the best loan for your personal circumstances. Instant payday loans can be an effective means of financial support. With these types of loans, borrowers make an application and, as the name suggest, receive funds from the loan within hours of application approval. However, again, these are not for everyone, and careful consideration will be required before deciding whether this is the best option for you.