Funding Options selected for Open Up Challenge Phase 2

21 June 2018

Nesta has chosen Funding Options as one of ten participants for Phase 2 of the Open Up Challenge, its £5million prize for Open Banking.

According to government research by Ipsos MORI, around two-thirds of SMEs approach only one provider when seeking finance, typically their main bank.

When rejected for finance, most SMEs will simply give up rather than seek alternatives, with significant impact from jobs lost and foregone.

Funding Options has achieved unique market traction in using modern online technology to encourage SMEs to shop around, with volumes exceeding all competitors combined.

In its winning entry for Phase 1 of the Open Up Challenge, Funding Options used anonymised Open Banking data to show that once a small business hits its overdraft limit for the first time, there is an 80% chance that this will become a recurring problem. Funding Options then worked with leading UK artificial intelligence (AI) firm Logical Glue to identify signals to predict in advance firms at risk of hitting their overdraft limit.

In Phase 2 of the Open Up Challenge, Funding Options will use Open Banking to enable banks and trusted advisors to deliver proactive and personalised finance offers to their SME customers, solving cashflow challenges even before they emerge.

However, even the thousands of SMEs funded through Funding Options each year is a fraction of the potential that lies in changing behaviours.

Conrad Ford, Funding Options CEO says:

“Integral to our Phase 2 entry is to tackle this over-reliance on banks head-on. Open Banking will allow banks to offer not just their own products to customers, but also the best the market has to offer. This is especially true in SME finance, where not every small business is right for bank lending, yet a thriving market of alternative lenders stands ready to deliver much-needed funding.”

Funding Options will be one of the first fintechs globally to deliver this new model of 'marketplace banking', through recently-announced partnerships with TSB in the UK, and with ING in the Netherlands, with more under active discussion.