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

The prize is part of a £2 million Affordable Credit Challenge run by Nesta Challenges in partnership with HM Treasury.

The three winning partnerships were adjudged to all have the potential to impact many financially vulnerable people across the UK who use credit to pay for everyday household expenses.

The winning partnerships are:

• Capital Credit Union with Nivo and Soar – A mobile app to make it easier for people to join and engage with a credit union, giving new audiences the opportunity to save and gain access to affordable credit.

• Fair for You with EML and Lending Metrics – A revolving loan facility to provide buffer credit specifically for an additional frozen food shop in school holidays, when low income households often using high cost short term credit to cover spikes in grocery costs when children do not have school dinners provided.

• Police Credit Union with Credit Kudos – A reward loan solution that uses open banking to monitor a borrower’s behaviour and reduce the interest rate they pay over time as they develop healthy financial habits – helping those in the police, armed forces and other protective services with a poor credit rating to access affordable credit.

The winners were chosen from six finalists which, as well as being given an initial grant of £150,000, have also been supported by Nesta Challenges and HM Treasury to develop their solutions by providing non-financial assistance such as network events and legal support.

Economic secretary to the Treasury John Glen said: “The three winners, announced at Budget, have done amazing work and I look forward to seeing how they help more people to access affordable credit products”

Chris Gorst, head of better markets at Nesta Challenges, said: “Social lenders haven’t historically been able to compete with high-cost alternatives on speed or reach and uniting with FinTechs addresses this issue.

“As these partnerships are becoming a reality, I believe we will see the beginning of a transformation in the personal lending market to support those who need it most.”

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