iwoca, Europe’s most innovative small business lender, has been announced a winner of the Open Up Challenge by innovation foundation, Nesta’s Challenge Prize Centre. iwoca is among ten companies that will each receive an award of £100,000 to develop innovative finance solutions based on Open Banking. 

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.

Commenting on iwoca’s success, Christoph Rieche, co-founder and CEO, said: “We’re really excited to be an Open Up Challenge winner and can’t wait to launch our Open Banking integration. Open Banking will break the banks' monopoly on current account data leading to a level playing field across business lenders. The era of waiting weeks or months to get a small business loan is coming to a close. This will make small business finance much more accessible and help them achieve their full potential.”

With the advent of Open Banking in 2018, iwoca will expand its product offering to compete head-to-head with high street banks on terms, while providing a substantially better and faster service. To achieve this, iwoca plans to launch a small business loan with terms of up to 5 years and an alternative to the traditional current account overdraft. Small businesses will get an instant credit decision based on their credit history and live-trading data, obtained via the Open Banking APIs.

The need for alternative funding to this critical segment of the UK economy has never been greater. More than half (56%) of small businesses consider securing finance a struggle and 45% of ‘would be seekers’ state ‘discouragement’ as the primary reason they will not apply for a business loan[1]. Lending to small businesses has contracted since 2011, despite big corporations and consumers benefiting from quantitative easing during that time.

Through 45,000 transactions, iwoca has funded more than 15,000 small businesses with a total of £300 million, since its launch in 2012. Its award-winning, tech-driven credit lines allow businesses to get approved within minutes through a simple online application process. Customers can then draw down funds as required, anytime, 24 hours a day. In Q2 2017, iwoca’s credit facilities represented 7% of all business overdrafts approved by the members of the British Bank Association according to a UK Finance report[2]. iwoca aims to finance 100,000 more small businesses in the UK over the next five years.

The Open Up Challenge is run by the Nesta Challenge Prize Centre. It was launched following the publication of the Competition and Markets Authority (CMA)’s Final Report in August 2016, which endorsed the creation of a prize to stimulate development of intelligent comparison services for small businesses. The prize is backed by the CMA, with funding from eight of the country’s largest providers of SME banking: Barclays, HSBC, Lloyds Banking Group, RBS, Santander, AIB Group (UK) p.l.c., Bank of Ireland UK and Danske Bank.