Daredevil plot turns on CastScore

DAREDEVIL SEASON 3 SPOILER ALERT

As season three of Daredevil explodes onto Netflix and sucks us all into the now familiar Marvel drama fest of nocturnal super-hero action, fight scenes, intrigue and love interest, I have to say I have been side-tracked a little by the brand new character of FBI Special Agent Ray Nadeem.

When we first meet Ray at his son Sammy’s birthday party, we find out the Nadeem family are in the midst of a family financial crisis. His wife Seema has had all her credit cards declined. Ray’s brother’s wife has cancer and their insurance has stopped paying for treatment. Ray and Seema have stepped in and helped cover their sister-in-law’s medical expenses. And now they are in debt.

Overwhelmed by the financial pressure, Ray asks for a raise at work and is denied. His boss tells him his low FICO score has put him out of consideration for promotion as he poses a bribery risk.

Instead, the agent is assigned the task of visiting arch villain Wilson Fisk in prison to elicit co-operation with ongoing investigations. Needless to say, it looks like Ray’s course is set on a slippery slope into well … bribery and corruption.

Not being a character in the original Marvel universe, purists may not embrace Agent Ray Nadeem as quickly as I have. But I have to confess to an ulterior motive. I’m drawn to Ray because he’s a character in the everyday universe of the world I live in too.

Financially Overstretched

He’s financially overstretched himself but he has done so with the very best of intentions. All he needed was a timely promotion, a window of time to pay off his debt, his sister in law to respond to treatment and all would have been well with his world. He would have had a routine visit to Fisk in prison and returned to his desk for a sandwich. Admittedly, this would be seriously bad TV, but in the real world, personal disaster would have been averted.

The plot all turned on a FICO score which just showed Agent Ray was in debt, not why or how likely he was to be able to repay it.

It was for people like Ray that Castlight recently launched the world’s first open-banking affordability score, providing people with a whole new way of demonstrating their creditworthiness.

Traditional credit scoring focuses on the consumer’s future credit behaviour being similar to their past performance.

CastScore, by contrast uses open-banking technology to analyse a customer’s transactional data in real time and score their likelihood of paying credit back. The AI that powers the CastScore technology has been validated on actual loan performance data, supplemented by expert analysis of spending trends with high street banks. CastScore then merges this information with transaction analytics, sourced from an up-to-the-minute review of the customer’s actual income and spend as well as a more complex analysis of lifestyle and discretionary spending.

“Redemptive” Technology

CastScore looks at and categorises every debit and credit, filling in the gaps in traditional credit data reporting and provides a 3D movie of an individual’s financial story. It gives people a chance to be fairly assessed. And it is a “redemptive” technology which allows people to make mistakes, recover from them and get back on track.

If CastScore had been checked with Agent Ray Nadeem’s FICO score, it would have shown that Ray had a good regular job, that he had a history of fulfilling credit commitments and that he had hit a blip. It would run Ray’s transactional data through financial insights and behaviour software and provide a lender with a score which reflected Ray’s 3D financial profile and the statistical likelihood of him being able to pay off his debts.

It could very easily have given him a score that would have reassured his boss, secured him the promotion and changed the world of Marvel forever.

World’s First Open Banking Affordability Score Launched By Castlight Financial

Affordability innovator Castlight Financial has developed a new open-banking affordability score, providing access to borrowing for the first time for the 5.8 million people, in the UK alone, with “thin credit files”.

The company, which has been pioneering open banking based affordability products for the last three years, including the Affordability Passport and Categorisation as a Service (CaaS), has now taken the open banking technology currently being used for traditional credit assessment and unlocked a powerhouse of additional functionality.

Revolution

The new affordability score, CastScore, is not dependent on a customer having a history of credit in order to demonstrate creditworthiness and instead uses open banking technology to analyse a customer’s transactional data in real time and score their likelihood of paying credit back.

The AI that powers the CastScore technology has been validated on actual loan performance data, supplemented by expert analysis of spending trends, with high street banks. CastScore then merges this information with transaction analytics, sourced from an up-to-the-minute review of the customer’s actual income and spend as well as a more complex analysis of lifestyle and discretionary spending.

CastScore is currently being piloted by three of the UK’s High Street banks.

Says Phil Grady, CEO of Castlight Financial: “CastScore looks at and categorises every debit and credit and so it allows us to fill in the gaps in traditional credit data reporting and give customers, particularly those with thin files, a chance to be fairly assessed. Traditional credit scoring focuses on the consumer’s future credit behaviour being similar to their past performance through looking at historic credit reference agency data. The CastScore creates an up to date view of a consumer’s available disposable income and is able to predict future payment performance using more recent and relevant data. It truly represents a revolution in how lenders may view all consumers, from those with established credit profiles to those with thin files.

For the first time someone with a thin credit file will be able to demonstrate, at the touch of a button, not only that they have a regular income coming in, and that they are financially robust, but they will be able to show a set of exemplary financial behaviours which make them a very good credit risk indeed. For a financially cautious millennial with little credit history but enough money in the bank, CastScore could be the difference between securing a mortgage or being stuck in the generation rent trap.”

But it’s not only the millions of people with little or no credit footprints who will potentially benefit from the CastScore technology. A predictive CastScore, even somewhere in the middle of the range, could be used to augment a traditional credit score and radically improve it.

Says Grady: “The reason that a CastScore rating, taken by a lender in conjunction with a traditional credit score can improve a customer’s credit score is because CastScore isn’t just reviewing a history of credit repayment performance. It is instead based instead on an individual’s nuanced behaviours. The open banking technology scans all the customer’s transactional information and assesses whether the customer is a saver or a spender, do they run a tight ship or exceed their means and even are they a homebody or a party animal. It will also raise good and bad financial behaviour flags. A good flag might be that discretionary spending on charitable giving and personal health has increased. A bad flag might be unpaid bills, bank charges, increased gambling or payday loans.”

Machine Learning Powerhouse

Castlight’s machine learning powerhouse merges both the transactional analytics and the customer’s financial “story” into the CastScore which gives lenders all the enhanced predictive information they need to make a lending decision for customers with thin or no credit files. And for customers with traditional credit files, it significantly augments their financial profile, providing all parties involved with more insight, less risk and more lending scope.

An example of CastScore’s insight might be a customer who takes out a finance plan for a new car in January. This commitment may appear on a traditional credit score a few months later, if the credit score has good coverage, and only then will the credit score be updated. However, the CastScore score will update as soon as payments start being made from the account, providing financial decision makers with up to the minute information.

CastScore assesses a customer’s full financial big picture. So, whilst the new car payments may be greater than the customer’s previous car payments, there may be reductions in insurance premiums. The customer may also have taken out roadside assistance, which is statistically a good indicator. By taking factors like this into account CastScore could demonstrate that the new car was a sensible investment that in the long run cuts costs and increases financial stability.

CastScore’s algorithms have been uniquely trained to analyse the hard numbers but also to reach out into the complexity of a customer’s real life and set credit and income movement in context. CastScore’s AI brain has the computing power to demonstrate that, in a particular case, a new car may not just be an item to put on a list of credit obligations, it could be a sensible investment that in the long run creates stability in the family life and cuts costs. Ultimately that means that when the entire credit scenario is computed, it will actually factor positively in the generation of a good CastScore.

3D movie

As CastScore is being piloted with the UK’s banks as a means of enfranchising customers or helping them augment their credit scores, Castlight Financial is already developing CastScore to provide the banks themselves with significant competitive edge in a busy market place.

Says Grady: “If traditional credit scoring provides a snapshot of a customer’s affordability, CastScore provides a 3D movie. That means that any bank offering CastScore to customers is going to be able to use the enhanced modelling system to identify risk more accurately and ultimately offer better credit terms. Credit risk teams will also be able to use CastScore  for ongoing control and monitoring of customers’ finances, providing an early warning system of potential problems and allowing them to update their risk models and limits if needed.

“Open banking has already revolutionised the way we think and bank. But it’s a massive iceberg, with a huge percentage of its capability still to be exposed and exploited. By harnessing the full potential of open banking, we are powering a potential revolution in credit scoring and the wider world of banking. I believe the CastScore can help both lenders and customers access better, safer credit as well as enfranchising the millions of people with thin credit.”

False Eyelashes And Succumbing To Influence

by Danielle Flynn, Castlight Marketing Manager

More than one in five 25-35 year olds spend more than 60% of their income on the very day it enters their account and 3% of these millennials even find themselves in the red by the end of payday, according to a survey by KPMG and reported in insider.co.uk. KPMG’s survey went on to show that the 42% listed unsecured loans and credit card payments as a significant payday outgoing.

Another article, by Shawn M Carter published on the US site CNBC, examined social media’s impact on American spending habits and found that 90% of millennial respondents say social media creates a tendency to compare their own wealth or lifestyle with those of their peers. And that 57% of the millennials surveyed reported feeling “inadequate” about their own life and then went on to part with money they hadn’t planned to spend.

With big brands investing increasingly bigger chunks of their marketing budget on “influencers”, across various social media platforms, millennials are being bombarded not only with images of their peers’ holidays, handbags and harissa chicken but also a stream of images of social media influencers living the dream.

Top influencer Huda Kattan is a make-up artist and beauty blogger with 24.3 million followers on Instagram and 2.2 million subscribers on YouTube. And when Kim Kardashian wore Kattan’s branded false eyelashes, so did thousands of her followers. Kattan’s currency soared and her spot at the top of the influencers’ charts confirmed.

As a millennial, it’s clear that we are exposed in subtle ways to the influencers’ machine and to a relentless pressure to spend. There’s also a sense that spending beyond one’s means has perhaps become normalised, in a way which it wasn’t in previous generations.

At Castlight Financial we are known for our Affordability Passport which uses open banking to look at a customer’s bank transactions, categorise them into 155 categories of spending and 29 categories of income and provide a definitive analysis of exactly how much a person can afford to borrow and repay. The Affordability Passport is primarily used for people looking to secure a mortgage or a loan and can allow brokers and lenders to provide a report and an answer in under 10 minutes. However, the powerful categorisation technology that powers the Affordability Passport, can also be used to help people improve their money management skills – or Financial IQ.

Our data scientists are currently fine-tuning our software so that millennials, and other generations too, will soon be able to run their transactions through our software, see exactly where they are spending their money and whether they demonstrate a high or low Financial IQ. And if it’s a low Financial IQ, what they can do to improve it.

Watch this space as I believe that, before we know it, social media influencers are going to have a lot less influence. As we all take on board the tools that will help us increase our Financial IQ, we will be more aware of what we are spending and why. We will be able to take back control of our bank accounts and stay safely in the black way beyond payday.

Just because Kim Kardashian wore Huda Kattan’s lashes that doesn’t mean we all have to!

Time For A Financial Fire Drill

A law has just come into effect in the States which allows American consumers to freeze and unfreeze their credit without paying a fee. Signed in May by Donald Trump, the Economic Growth, Regulatory Relief and Consumer Protection Act amongst other things, abolishes the not inconsiderable fees which were previously associated with freezing and unfreezing credit.

Will they do it? I’m not so sure given that, according to various surveys, only 8% to 20% of customers have enacted one in the last 12 months.

Surprising maybe, but what I found even more surprising is that whilst freezing credit is a key tool for consumers to use to safeguard their identity, it is not widely understood.

I was talking about this with friends this week. Friends who are professional people but not financial professionals. Their assumption was that a credit freeze was a freeze on the use of their credit cards.

Why would they not? It’s not exactly crystal clear is it? And they’re not alone. Researchers at the University of Michigan School of Information in Ann Arbor, also found plenty of consumers who thought that a credit freeze stops them from using their own credit cards, rather than restricting access to their credit files and stopping crooks opening credit reports in their name.

So with an apparent level of inertia in the States on credit freezing and unfreezing and a lack of understanding of the process here in the UK, it’s maybe a good time to consider our options. Time for a bit of a financial fire drill.

Putting your credit on ice, freezing it so that no-one can open an account in your name is one way to safeguard against identity theft but what else can we do as consumers to protect our credit and identity?

Lauren Lyons Cole of Business Insider compiled a thorough checklist earlier this year. And I couldn’t agree more with her recommendations. I believe now is a good time to give them another airing.

  • Monitor your current accounts daily or weekly. Use an account-aggregation app like Mint or log into your various accounts to make sure all charges were made by you. If you see something suspicious, contact your bank immediately.
  • File your taxes early. The IRS is cracking down on tax fraud, but there could be an uptick after the Equifax breach. Get your tax information organized early, and submit your return as soon as you receive your W-2 and 1099 forms. Added benefit: If you’re due a refund, you’ll get it sooner, and if you owe taxes, the amount isn’t due until April 15 regardless of when you submit your return.
  • Use secure passwords and two-step verification. Because most identity theft occurs with existing accounts, one of the best things you can do is safeguard your data online, especially for accounts that contain identifying information and credit-card or other financial data.
  • Set up alerts for new credit activity. Save yourself money and use a free credit-monitoring service, like Credit Karma or Credit Sesame. You can also set up a fraud alert or credit freeze if you’d like.
  • Check your credit reports regularly. You can access one free copy of your credit report from each of the three bureaus once a year through the government-sponsored AnnualCreditReport.com. Set a calendar alert to remind yourself to do this every year, or pull one report every four months to be extra vigilant. While you’re at it, there may be things you can do to improve your credit score, fix any errors on your credit report, and optimize your collection of credit cards.
  • Choose identity-verification questions and answers carefully. Additional identity-verification questions can help keep accounts secure, but not if you choose questions like “What street did you live on when you were growing up?” or “Where were you born?” that could easily be answered with access to your social-media account or other personal information.

Too Much Month Left at the End of the Money

A recent thread on Mumsnet exploded after someone posted “After all expenses we are left with about £1k in our account. My husband is flapping saying its not enough of a buffer … my argument is, we are lucky to have that much and we shouldn’t waste time fretting … Am I wrong not to worry?Read more

“We’re Not Sleepwalking, Mr. Brown” Says Castlight Financial

Gordon Brown’s warning this week that “We are in danger of sleepwalking into a future crisis”, is keeping me awake at night.

I couldn’t agree more. In fact, I’ve been putting out this message all last year. Read more

The Affordability Passport and Babies are Powerful Disrupters

Life will never be the same after a baby. I knew that. I expected that. And when Brodie arrived on the scene 10 weeks ago, I was prepared for things not being the same. Read more

CaaS Provides the Perfect Plimsoll Line

A few months ago Jonathan Davidson, executive director of supervision for retail and authorisations at the Financial Conduct Authority (FCA) said that a worrying number of householders may be “in too deep” with their borrowing.

But how deep is too deep? Read more

Encouraging response to the Big View pilot

“I’ve tried to get help but there’s a 10 week waiting list to see a Money Advisor.”

“I am getting so many final warning letters that I’ve simply stopped opening them.”

“Interest and charges are going up every day. I don’t even know how much I owe now.”

“I’m very anxious and my health is suffering.”

These are just some of the cries for help from people in Glasgow who are struggling with debt and have reached a point of crisis. I know that, because over the last few months we have spent a lot of time at Castlight talking to people about debt and we have listened, with real concern, to their stories.

And I’m really proud to be able to say that we channelled that concern into action and last month partnered with the Big Issue Invest (BII) and Advice Direct Scotland (ADS) to launch an affordability tool, specifically designed to empower people struggling with debt to take control of their own data and get their lives back on track.

The tool we developed is a version of our Affordability Passport, called the Big View. It’s at a pilot stage just now, accessible through the ADS helpline in Glasgow, but the initial signs are very encouraging.

360-Degree View of Finances

The way The Big View works is similar to the Affordability Passport. It uses the same open banking technology to allow users to get an in-depth, 360-degree view of their finances. In just a few clicks, the user’s financial position is set out in over 150 clear categories of income, debt, discretionary and non-discretionary spending.

If the user wishes, he or she can choose to share the Big View report with an ADS adviser who will then work with them to interpret the findings and develop solutions.

For ADS advisers the Big View is transformative. The Big View report will immediately flag up critical debt cases and therefore ensure that the people who need help the most can be helped quickest. Advisers have the data that allows them to prioritise and they also have detailed, accurate information on which to base their advice. They don’t have to rely on information given to them by the client – who may well have a pile of those unopened final warning letters on the kitchen table.

Path Out of Debt

Since the Big View launched last month, I know there are now people in my city, getting up in the morning, without the oppression of debt anxiety pressing down on them. They may not be clear of debt yet, but the path out of debt has been charted and they are now in control. That’s a very good start.

Charities and other organisations in the debt space consistently report there are currently over 8 million adults in the UK who have a problem with debt. That’s one in six adults.

I am confident that the Big View will prove to be instrumental in reducing that deeply worrying statistic. We are encouraged by the success of the Glasgow pilot so far and are looking forward to moving on to roll out the Big View throughout the UK.

For more information, visit, castlightfinancial.com or tweet @Castlight using the hashtag #TheBigView.

Financial inclusion in sight for UK’s renters

We have been following the journey of Lord Bird’s Creditworthiness Assessment Bill through the parliamentary process and I was very thrilled to see it progress through the committee stage at the end of last week, with widespread support and no amendments. Read more