A fintech hackathon aiming to create technological tools to help people struggling with their finances has kicked off in the UK.
A hackathon is an event during which participants, typically coders and developers, gather – in current circumstances ‘remotely’ – to design and present innovative solutions to a particular challenge.
Organisers of the ‘Fairer Finance Hackathon’, which is running for 30 days, are seeking to tackle the problem of direct debits or standing orders ‘bouncing’ when a person has insufficient funds in their bank account – a situation that can trigger penalty charges. Participants are asked to re-imagine ‘direct debits’ as ‘direct credits’ and to create an app that would allow such scheduled payments to flow only when funds are sufficient.
The hackathon, which is being funded by a grant from non-departmental public body Innovate UK, has the sub-title ‘Direct Credits: Combating the Poverty Trap and Debt Spiral’.
It is the brainchild of Richard Hallewell, co-founder and chief executive of CPRAS, a payments processing company set up 12 years ago and which received the Innovate UK grant. “Once you hit a certain point, the financial system starts to work against you, sucking you into ever greater problems. This does not have to be how it is,” said Hallewell. “The economic consequences of COVID-19 make it a threat to millions more.”
Hacking in from the Far East
The hackathon got underway on 1 September and ends on 30 September. Twenty-two teams have entered so far – eight multi-person teams and 14 people competing as individuals – including some fintech start-ups and entries from locations including Hong Kong and the Philippines, the organisers told Global Government Fintech.
The organisers have also asked entrants to incorporate an ‘affordability scoring’ function into their app. They believe that credit scoring – the method used by lenders such as banks to help decide whether people qualify for credit – often unfairly assesses people’s financial situations, “so effectively excludes millions from mainstream services, forcing them into the hands of high-cost alternatives”. Affordability scoring, by contrast, is a fairer tool, the organisers say.
Parliamentarians lend their support
Parliamentarians endorsing the hackathon include John Glen, economic secretary to the Treasury, who said: “I am pleased to see the power of the UK’s tech talent harnessed to tackle problem debt, poverty and the resulting mental-health issues. Innovative fintech solutions can play an important role in helping people take control of their finances and levelling-up our country.”
Lisa Cameron MP said: “The current banking and finance systems place a greater burden on those who can least afford to pay. Quite literally, ‘being poor costs more’ and the impacts can be lifelong – even devastating. I fully support the initiative to develop an app to tackle this iniquity”.
Simon Fell MP said that as a former chair of a credit union he had witnessed first-hand the problems that the hackathon is seeking to address and so was “keen to see what innovative solutions are brought forward”.
The hackathon’s judging panel includes Lord Holmes, who is co-chair of parliamentary groups on fintech, artificial intelligence, blockchain and the ‘Fourth Industrial Revolution’; Paul Maynard MP; and Peter Gibson MP.
The government funding was awarded through an Innovate UK-managed competition entitled ‘Business-led innovation in response to global disruption’ through which more than 800 businesses were given funding. Other organisations have contributed prizes to the hackathon.
Hackathons become popular among public authorities in recent years, particularly in response to the pandemic. Global Government Fintech reported last week on the Virtual African Hackathon, co-ordinated by the Central Bank of Kenya and the Monetary Authority of Singapore (MAS) on the topic of ‘Harnessing fintech in addressing COVID-19’s effects on healthcare, digital payments and economic recovery.’