As the phenomena of crowdfunding grows to fill the gaps left by more conventional finance, we look at how even the world's biggest wealth manager is seeking to promote its efforts to encourage business innovation.

You probably know names like Indiegogo and Kickstarter; maybe you have even heard of newer outfits such as Fireflock.

In short, you have heard of crowdfunding.

Crowd Funding is here to stay and is being discussed in hushed tones in the corridors of the established financial giants as it begins to “eat their lunch” as one senior local banker eloquently put it.

After the financial crisis, as more and more business embraced digital channels, the Web also helped the crowdfunding industry grow rapidly. The timing was right: the banks, saddled with tougher capital requirements, were risk-averse and certainly not willing to lend to small businesses or to clients with innovative ideas that did not fit into the banks restrictive lending parameters. To some degree, crowdfunding is part of a larger phenomenon of non-bank funding for business sometimes dubbed as “shadow banking”, although there is nothing particularly murky about it. (For more on this issue, see this article.)

Crowdfunding models vary greatly. For example, there is the reward-based form; an equity based approach or credit-based model. Also, it is not only up-and-coming entrepreneurs with potential life-changing ideas that have tapped the venture creation well. Even more established firms are showing interest.

Just over a week ago, fiscally struggling Formula One racing team Caterham raised the £2.35 million ($3.7 million) needed to enable it to go racing at the Yas Marina Circuit through the site crowdcube.com in only a matter of weeks. (To see another racing-related article here, in this case about the Singapore F1 race, click here.)

With this in mind, last Friday here in Singapore, responding to these changes and in line with its own digital strategy, UBS Wealth Management launched the "UBS Innovation Challenge". In collaboration with local venture finance firm Expara, the objective is to provide start-ups and tertiary institutions with opportunities to showcase innovative solutions.

It was apt timing with Singapore’s Prime Minister Lee Hsien Loong this week pushing the affluent city-state to become a leading and innovative “smart nation”.  

Contestants were asked to submit solutions that would identify the most relevant information from all available data and deliver dynamic personalized content, tailored to the individual's needs and investment preferences.

The presentations of the five shortlisted contenders resembled a cross between Shark Tank and Dragons Den though the judges offered more empathy and less fire. The prize for the eventual winning team was a cash prize of S$40,000 and the chance to be named the inaugural UBS Innovation Challenge Winner.

Team SQREEM's solution came up tops in the challenge. The winning solution is a highly refined, pattern detection platform that, the firm says, is focused on the ability to identify and map behaviour quantitatively by measuring complex individual associations, on a vast scale.