UK fintech startup Iwoca has been named as one of ten winners of the Open Up Challenge today, a prize for companies developing financial solutions which will directly benefit from the upcoming Open Banking regulations.

The new rules state that banks must create open APIs so that customer data can be shared between organisations and be incorporated into third party applications in a common, consistent format.

© iwoca
© iwoca

The competition was set up by the 'innovation foundation' Nesta to find teams creating the best digital services for small business customers on top of these newly opened up APIs, with a prize of £100,000 per winner, expert advice and early access to a Data Sandbox of anonymised UK banking transaction datasets and APIs aligned with the forthcoming Open Banking standard.

Iwoca was chosen as an Open Up Challenge winner from an initial 150 applicants by an independent panel of judges for "developing products assessed as most likely to have a positive impact on UK small businesses in 2018 and beyond", according to a press release from Nesta.

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The startup specialises in offering small business loans far quicker than incumbent banks can by using software to make credit decisions. It claims to have funded more than 15,000 small businesses with a total of £300 million since its launch in 2012.

As CEO Christoph Rieche explained to Techworld, real-time access to customers' transactional data, which the banks have traditionally held on to for current accounts, is very valuable to his company.

"Up to today it has been very hard to get that information in a truly verified and seamless format," he said.

Previously customers would submit statements, mostly as PDFs, and Iwoca would scrape the information from those documents using software in order to make a credit decision. Now, with seamless access to transaction data, Iwoca should be able to remove this friction, and any risk of human error or fraudulent documents being submitted.

"I believe Open Banking makes this data flow a lot more secure and seamless and there will be much higher adoption due to the increase in speed," Rieche added.

The CEO hopes that continued access to client information will allow Iwoca to provide ongoing credit facilities without customers having to resubmit documents. He also believes that having this real-time access to customer data "allows us to add more value added services to customers" over time.

Now Iwoca developers are busy preparing to integrate with the Open Banking APIs when they go live in January. The startup has already applied to be whitelisted by the Financial Conduct Authority to receive the API feeds once they are opened up in January. Iwoca applied when the FCA opened the process on 13 October and Rieche has "no reason to believe our application will not be successful".

Winning the Nesta award also has the benefit of an injection of money, to be spent on R&D according to Reiche, and public exposure. "I think the prize was important to have a few companies already prepared and focused on [Open Banking]. To have offerings available when it opens up.

"Now as a fintech community it is our job to create awareness of it too through our own marketing and product offerings."

The other nine UK fintechs selected to benefit from the Open Up prize this week are: Bud, Capitalise, Coconut, Credit Data Research, Fluidly, Fractal Labs, Funding Options, Handle (by Bizfitech) and Teller.

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