Fintech companies, among others, are being encouraged to take part in the initiative and provide innovative tech-based solutions.
The Challenge will support innovators to develop and scale solutions through financial grants and non-financial support – such as help with product and service design.
Companies operating in the fintech space could win up to £475,000 as part of the Challenge’s Financial Recovery Stream. This aspect of the initiative will look to identify solutions which have the greatest potential for helping people access financial assistance, manage cash flow or access affordable credit.
Caroline Siarkiewicz, CEO of the Money and Pensions Service said: “The Covid-19 pandemic has intensified the money worries many people face, but particularly for young people and workers on lower incomes.
“It’s vital that those worst hit can now access the right support and start to find a way forward with their finances.”
To mark the launch of the Challenge, Nesta conducted research to reveal how the pandemic is impacting those in low paid work, younger workers and those in insecure roles, such as gig workers or those on temporary contracts.
The research found that, since the pandemic started, workers in these groups are twice as likely to be working fewer hours compared to people in more stable work (26% compared to 13%).
Additionally, nearly one-third (32%) of workers said a second lockdown will send them over the edge financially.
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Ravi Gurumurthy, Chief Executive of Nesta, said: “Covid-19 has created a huge economic shock. Millions face severe threats to their job security and household finances, and we know that low-paid workers, people in insecure roles and those under 25 will be hit hardest.
“I’m looking forward to seeing the range of solutions innovators develop to address these issues and support those whose jobs and finances have been most impacted by the pandemic.”
Hang Ho, Head of Global Philanthropy for EMEA and LATAM, JPMorgan, added: “The impact of the Covid-19 pandemic is being felt most keenly by those already in precarious economic positions, many of whom have already lost their jobs or have little or no financial buffer to weather the crisis.”