Affordable Credit Challenge

Supporting tech solutions to increase access to affordable, responsible credit

What was the Affordable Credit Challenge?

The Affordable Credit Challenge supported partnerships between UK community lenders and fintechs to develop innovative technological solutions that will increase access to affordable, responsible credit. It was backed by HM Treasury and delivered by Nesta Challenges.

Why did we run the Challenge?

Most of us rely on borrowing of one form or another, be it loans, credit card debt or mortgages. But the inability to access fair and affordable credit is a challenge faced by millions of people across the UK. Credit unions and other community lenders offer an alternative to high cost credit such as payday loans, however, they’re competing with high cost credit providers with more resources. 

We believe a better personal lending market is possible, with affordable credit available to more of those who need it. This will be achieved by combining the values and reach of the community lending sector, with the insights and technological capabilities of fintechs. 

The ultimate objective of the Challenge was to widen people’s access to responsible, affordable credit provided by community lenders. To help achieve this, the Challenge supported partnerships between community lenders and fintechs who are working together to use technology to address challenges or opportunities faced by community lenders.

8 million people in the UK...

are estimated to use credit to cover everyday expenses, which is why making this credit responsible and affordable is crucial

Over £1 billion worth of loans annually...

are offered by credit unions, CDFIs and other community lenders, serving almost 2 million people

22% of UK adults have less than £100 in savings...

Payday lenders, rent-to-own firms and home credit providers prey on people in need of credit

The winners of the Affordable Credit Challenge

Three partnerships between community lenders and fintechs secured a cash prize of £200,000 each for developing innovative solutions that make credit more accessible and affordable.

Capital Credit Union in partnership with Nivo and Soar

Capital Credit Union, working in partnership with Soar and Nivo, has build an end-to-end member journey that will encourage more people to join credit unions. This solution will bring credit unions to new audiences, particularly financially excluded and younger people providing them opportunity to save and gain access to affordable credit. 

Fair for You in partnership with EML & Lending Metrics

Described as a ‘school holiday buffer scheme’, this solution is a structured revolving facility that provides modest credit under £100 to ease pressure in lower income family households through school holidays, when there is a spike in the use of high cost short term credit and foodbanks. A flexible and supportive weekly payment option to purchase an additional freezer shop at the start of each school holidays.

Police Credit Union in partnership with Credit Kudos

Police Credit Union wants to provide customers who would normally not be able to access credit with a new reward loan. The reward loan will use Open Banking to monitor the borrower’s behaviour and dynamically reduce the interest rate they pay. This approach will allow more customers to access fair credit whilst reducing risk for community lenders and enabling lenders to process a higher total volume of applications.

News on the Challenge

Fast and easy access to loans is vital for many people faced with bills out of the blue

The demise of short-term lenders might be a cause for cheer among those who loathe such purveyors of loans that charge sky-high interest rates to those who can least afford them.

£2m fintech challenge launched to fight payday lenders

The Treasury says ‘too many people are turning’ to payday and guarantor lending firms. A £2m fund has been launched to encourage fintechs and community lenders to develop new ways to make credit more affordable.

Fintechs invited to enter £2m affordable credit challenge

Over 5.4 million high-cost short-term credit loans were made in the year to 30 June 2018, according to the Financial Conduct Authority’s consumer credit data.

Prize aims to make credit more affordable and accessible

The Affordable Credit Challenge will support partnerships between UK community lenders and fintechs to develop innovative technological solutions that will increase access to affordable, responsible credit.

Challenge timeline (click and scroll to the right)

31 July 2019

Applications opened

30 Sept 2019

Applications closed

Nov 2019

Participating partnerships announced

Nov-March 2019

Partnerships work to develop solutions

March 2020

Winners announced