The UK’s Treasury has joined forces with an innovation foundation to make affordable credit accessible to a broader UK market, offering £2m in development grants.
The government has created a partnership with Nesta Challenges, a charitable foundation that works with policymakers to make markets more open and competitive, to launch the Affordable Credit Challenge.
The aim is to encourage fintechs to forge partnerships with community lenders to widen access to affordable credit for consumers with few products and services to choose from.
The Affordable Credit Challenge will support partnerships seeking to create innovative technology solutions to increase this access. As part of the initiative, a £2m pot of development grants will be made available to six partnerships working on solutions with the biggest impact. Three of the partnerships will then win cash prizes in the spring of 2020.
To coincide with the launch, the Treasury published a study showing that half of those who borrowed from high-cost lenders struggled to repay the loan on time and a similar proportion (49%) had to borrow more to pay it back.
Economic secretary John Glen said: “Millions of people struggle to access fair and affordable credit. I want to see more people benefit from the transformative power of digital technology, which is why we have launched the Affordable Credit Challenge. This is a vital opportunity for fintechs to work with community leaders to give more people control over their money.”