Smart Data will propel a new category of start-ups, just as open banking did for fintechs

Open banking has revolutionised financial services. New fintech entrants to the market are providing a huge range of services to consumers and businesses, underpinned by secure data sharing. In turn this has spurred competition, with incumbent banks making their offerings more innovative – in some cases working with, and in other cases acquiring, the very fintechs that have turned the industry on its head.

Open banking has made lasting changes to the industry, from instant payment transactions between banks, strengthening security measures and enforcing greater transparency for customer data.

A driving force behind the growth of open banking in the UK were the Open Up Challenges in 2017 and 2020. The challenge prizes incentivised the development of innovative open banking solutions for SMEs and individuals, and played a pivotal role in launching the concept of open banking with the UK public.

Notable winners included Funding Options – Europe’s leading marketplace for business finance, each year raising £100m+ in vital financing for thousands of UK SMEs, and Moneybox, helping customers save by setting money aside through round ups or regular deposits.

While open banking was expected to diversify banking services for SMEs and consumers, it has also led to some unexpected developments along the way. For example, HMRC now integrates open banking into its services for paying 43 different tax types.

Open banking is an example of "smart data", in fact it is one of the only real-world examples of smart data in action. The parameters of what data open banking uses are pretty narrow; put simply it’s the income and outgoings of a given bank account. Yet, unlocking that narrow band of data for authorised third parties has been transformative.

Consider the vast array of other data that a consumer or business generates every day - from their pensions, insurance and loans, their EPC ratings and smart meter data, their shopping baskets and loyalty cards. All this data exists, but is locked away; what if it could be made “smart” in the way that bank account data was for open banking? What new services could that unlock? What creative solutions could fintech pioneers and other data innovators come up with next?

Last year, the Smart Data Discovery Challenge asked innovators to share their visions of what could be possible with the use of smart data. The four winners were announced in spring last year and included Rodeo, a smart earnings app to help gig workers plan their finances and Mealia, an app that uses supermarket data to recommend cost saving alternatives.

Smarter Contracts also won with an online financial assistant with personalised money-saving comparisons and Smartlayer.ai completed the winners list by proposing combining open banking data with smart energy data to help customers manage their energy consumption and reduce their CO2 emissions.

The Smart Data Challenge Prize

Inspired by the impact of the Open Up Challenges and the possibilities that this trove of untapped data presents, the Department for Business and Trade has launched the Smart Data Challenge Prize. It is calling on innovators to create new smart data products and services that harness data from across multiple sectors.

Working with Challenge Works, the Open Data Institute, and the Smart Data Foundry, the prize will reward cross-sector solutions that benefit consumers, small businesses and wider society. The prize is particularly keen to encourage ideas that work across financial services, energy, retail, transport and home buying.

One of the biggest obstacles currently facing Smart Data innovators is the lack of real-world Smart Data available to them. To experiment, iterate and scale proofs of concept, innovators need access to high-quality, robust and secure data to demonstrate how their ideas will create lasting benefits for people and businesses. 

As such, the prize is offering access to a bespoke Smart Data Sandbox, curated by the Smart Data Foundry. It will bring together synthetic data on people and businesses across 11 broad data domains - including banking, insurance, investing, property, energy, and retail - each encompassing multiple datasets. Entrants will be able to use the synthetic data to ensure their solutions take a cross-sectoral approach and can supplement it with their own data.

In May 2025, 10 finalists will be supported with seed funding of up to £50,000, expert mentoring and access to the Sandbox to test and develop their ideas into working prototypes. In Autumn 2025, an overall winner with the most promising solution will be awarded £50,000, with two runners up receiving £25,000 each.

A smart data future

In just seven years, open banking has demonstrated the enormous potential of smart data. Legislation is now progressing through parliament to make it possible to unlock the vast array of other data that consumers and SMEs generate in a similar way.  

Through the prize, the government will gain insight into a range of in-depth, tested use cases across a variety of sectors, providing a clear picture of the potential barriers to development, and exactly what data would need to be unlocked to bring the most innovative ideas in the Smart Data space to life in the long term.

Open banking was only the first step to unlocking the full potential of the data we all generate. The ingenuity of Britain’s fintech entrepreneurs secured the UK as the leading fintech hub outside of San Francisco. Now, the Smart Data Challenge Prize is on the hunt for the next generation of innovations that can translate the positive impact of open banking, but for multiple sectors.

A Smart Data ecosystem that is interoperable across sectors will unlock a wealth of opportunity to solve problems facing people and SMEs, in ways that haven’t been possible before. Expanding Smart Data beyond open banking provides new opportunities for British businesses to offer cutting edge innovative services. Smart Data can help propel a new category of start-ups and scale-ups just as open banking did for fintechs.

To find out more and to enter before 14 March 2025, visit smartdata.challenges.org