Use the Castlight brain to stay ahead of the game

The brain makes around 700 new connections each day – every time we do something for the first time or absorb new information, brand new neural pathways are formed. And the more connections we make and continue to use, the more effectively our brain works for us.

At Castlight Financial our data scientists and our customers are making connections between our products all the time. Our developers are making leaps between products, developing syntheses of ideas to create new services to meet the ever changing needs of the financial marketplace. And our clients too, are making connections, moving through one product to another, merging products, asking us to develop new products, bolting on aspects of one product to another.

And as our customers work with our developers and implementation teams, every day we see new connections being made between our customers’ pursuit of excellence and the solutions we can offer. New neural pathways are being formed, our customers’ businesses are being strengthened.

So that’s why I like to use the analogy of Castlight’s product portfolio as a brain – with neural pathways all leading off to different products – but with myriads of connections between them.

Castlight Financial portfolio of digital tools

Digital tools are too often put in a “toolkit” which is a perfectly good analogy for the way digital tools are used in many companies. But for us, I think the toolbox is too static. Once you’ve used a tool you put it back in the box and take another one out. We don’t want our customers to use our tools like that. We believe our customers will benefit if they sometimes use more than one tool at a time, if they adapt the tool as they go along, combine two tools together or get someone to run after them with a new tool that was never even in the box. And we also believe that our tools will make such a difference to our customers’ business that they will never want to put them back in the toolkit.

That’s why using the analogy of a brain to think about Castlight Financial’s portfolio of digital tools works so much better for us.

If we stay with the picture of the brain, our tools are located in different nerve centres of the brain. Some are more right brained products – intuitive, thoughtful and subjective. Products for instance like our Financial IQ, which uses customers’ transactional data to provide advanced insights into spending behaviour and reports its findings as a “persona” with a Financial IQ score and a set of uniquely individual predictive behaviours. It’s a product that understands how people think and behave. Other products are perhaps more left brained – more logical, analytical and objective such as CaaS or Categorisation as a Service. CaaS is the world’s most powerful engine for categorising and interpreting customers’ transactional data, which will, within minutes, take a customer’s raw transactional data, crunch through the numbers and split the raw data into over 180 categories of discretionary and non-discretionary spending. It’s a product where the numbers tell the story.

How it works with our customers

But of course, the right brain works together with the left brain, with neurons jumping synapses, making connections all the time. And this is how it works with our customers too.

A High Street bank, for instance, may be using CastScore to reach out to customers with thin credit files, who are normally excluded from credit, and give them a chance to be fairly assessed. Then together we identify an opportunity to take a slightly different path and use CastScore to help their customers augment a traditional credit score and radically improve it. And then our hypothetical bank may recognise that they can take Castlight’s risk management customer analytics up a gear and go down the path of implementing Castlight’s Financial IQ or test their data in Castlight’s Data Labs using our APIs to review the affordability performance of their portfolio, highlight problem areas and unlock potential for growth.

Constant changes

It’s one of our most important functions as a team to help our customers identify which pathway to go down to secure the best tools to empower them to grow, and to be robust and effective for their customers.

The open banking revolution is taking hold and taking hold fast. And banks and other financial organisations need to be more nimble and innovative than ever before. We must give our customers every opportunity to move agilely in and around our product suite, using the tools that best suit their needs today and exploring those that might suit their needs tomorrow. And back in the Castlight lab we must continue to test the products we believe our customers will need next month.

In the same way that the human brain constantly changes in response to experience, helping us learn and adapt to our environment, Castlight’s products are designed to help our customers adapt to an evolving financial landscape and predict what might be around the corner.

We Must Address Financial Wellness

More than 6 out of 10 senior HR executives in the UK have seen a rise in financial well-being issues affecting employee mental health and work performance, according to a nationwide study by financial solutions company, MetLife UK.

 

And just this week Insider magazine’s Ken Symon highlighted a troubling figure of £51 billion, which according to a Yorkshire Building Society and Salary Finance report, is lost to the UK’s economy each year in productivity and recruitment expenses as financial pressures make employees unable to finish daily tasks and more likely to change jobs.

Financial Wellbeing At Work

These are very concerning statistics but I think what worries me, perhaps even more, is Metlife’s findings, reported by George Elringham on the Insight website, that businesses are concerned they do not understand enough about financial wellbeing, with 66 percent saying there needs to be more clarity on best practice on tackling financial wellbeing at work.

 

Adrian Matthews, Employee Benefits Director, MetLife UK said: ““There is no magic solution to improving financial wellbeing in the workplace….” And I’d agree with him as far as the magic is concerned. There may not be a magic solution but where we differ is that I believe there’s definitely a solution.

The Solution

Castlight’s Affordability Passport is ultimately a financial wellness tool, which can be put directly into the hands of individuals, whether they are employed by companies or working for themselves. Many of our customers use our Affordability Passport to demonstrate their affordability to lenders, but we are increasingly seeing people use its financial wellness functionality to manage and control their day-to-day finances.

 

The Affordability Passport uses open banking technology to access a customer’s transactional information and uses CaaS, a powerful categorisation engine to categorise income and expenditure, across any number of accounts into over 150 categories, summarising income streams, credit commitments, essential costs and discretionary spending. The customer achieves a 3D picture of their finances, including the pressure points, areas of vulnerability and projections of problems before they happen. For one customer, the Affordability Passport may flag up that what is causing severe financial pressure is their car loan repayment plan. For another individual, it may just be that reducing spending on digital subscription packages would provide enough of a financial buffer, to ease the strain.

 

For some of our customers the Affordability Passport journey is reassuring and informative. It’s like a maintenance gym routine, a financial wellness routine that ensures they stay on track.

Life Changing

But for others with debt who are far from financially well it’s more like a brand new gym membership and induction course rolled into one. And it can be life changing because it sets someone back on the right path, by demonstrating to their bank that, whilst the recent financial path might have been rocky, there are patterns of sound financial behaviour that can be worked on and outcomes turned around. At Castlight we call it redemptive technology.

 

It’s not a magic solution. But sometimes, for someone in financial despair, redemptive technology can feel a little like magic.

 

 

Looking forward to the Financial Inclusion Summit in Westminster

We’re looking forward to Thursday’s Financial Inclusion Summit in the Houses of Parliament with Lord Bird. It’s an exciting opportunity for us to talk about The Big View, our fintech tool which gives people with debt concerns access to a version of Castlight Financial’s affordability tool. Since it was launched earlier this year, in partnership with the Big Issue Invest and Advice Direct Scotland, advisers have been helping people get the bigger picture of their finances, by using the Big View’s data and interpreting the findings. Equipped with new financial insights the advisers have then been working with their debt clients to create pathways back to financial stability. The Big View is working, it’s making a difference.

So this Thursday we are hoping the summit will encourage debate and the sharing of ideas amongst finance professionals who believe, like we do, that financial technology has the power to be redemptive, to give people another chance.

One of those like-minded finance professionals is Frank Cooper III, BlackRock’s Global Chief Marketing Officer, and who has recently discussed how financial services can be used for everyone, not just the elite few, to become more knowledgeable about their finances. He delivered at keynote at the recent Money 20/20 Revolutionary Stage, “Is There Wealth Beyond the Wealthy”,  and so much of what he was saying chimed with Castlight’s mission. Where we at Castlight talk about redemptive technology, Frank Cooper III was talking about the importance of empathy in financial technology. We are singing from the same hymn sheet.

This is what he said about the power of financial technology to help people:

“I think for us to really connect with a wider range of people so that more and more and more people have access to what we call wealth we need to step up the way in which we connect with people, the way we intuit how they think, feel and act, putting ourselves in their shoes.

I think we can leverage technology to actually expand empathy and understand people better.”

Financial technology tools like the Big View, can crunch through data and provide the behavioural insights that help us understand exactly how people think and feel and act. It allows to us do what Frank Cooper suggests – and put ourselves in someone else’s shoes.

And financial technology can certainly be leveraged to help us understand people and people to understand themselves. We share that passion with Frank Cooper.

But we have a tool that can transform understanding and empathy into practical help and solutions. Our redemptive technology can actually put people back on the path of financial wellbeing.

That’s a big responsibility. And that’s why we are thrilled to have the opportunity at the Houses of Parliament to share our ideas and listen to other people’s as we explore together how financial technology can make the world a better place.

Frank Cooper III is right to be excited about the potential for financial technology to change behaviours and help ordinary people become more financially stable. I wonder how excited he would be if he knew that here at Castlight Financial, we are already doing it and have a fintech tool already being used by individuals who are financially squeezed, struggling or debt-laden. And that it’s helping them back on the path to financial health and back to the lives they want to lead.

Because The Big View can track back through historical transactional data, it allows an individual to identify problematic financial behaviour which needs to be addressed or areas where simple changes in patterns and behaviours could significantly improve their financial wellbeing.

We like to think of it as “redemptive technology”, the kind of fintech that uses some of world’s most cutting-edge categorisation software to address one of society’s oldest problems.

So Mr Frank Cooper, if by any chance you are passing through London next Thursday, you would be very welcome to join us! And when you hear what we have to say, I think you might be tempted to jump out of your seat in excitement too!

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.”

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 Tool is Developed for Asset Managers

By Ross Laurie, Advisor to Castlight Financial.

For the last couple of years, we’ve talked about how our CaaS (Categorisation as a Service) engine is revolutionising the way lending institutions are helping their customers take control of their finances and demonstrate their affordability credentials for a loan. Read more

Student Budgeting Apps Are Good But Don’t Come Close To The Affordability Passport

A whole new generation of students are about to leave home and embark on the adventure that is student life. For some, it will be the first time that they have had to manage their own budgets. And for many, they are watching, with a degree of alarm, the doors of the Bank of Mum and Dad (BOMAD) sliding shut.

But as BOMAD shuts up shop, the High Street banks are bombarding students with rail cards, Amazon Prime membership and restaurant vouchers.

But for this generation of students, there’s also the whole new world of challenger, digital banks, with a complex array of enticements aimed at students.

Digital Banks Are Changing The Game

Jessica Murray, writing on the Save the Student website, reviews the functionality and deals of the leading challenger banks such a Monzo, Starling and Atom as well as the range of budgeting apps and savings bots for managing and monitoring expenditure. There’s kWh for keeping the lid on energy consumption, mySupermarket and CheckoutSmart for driving food shopping costs down and Onanvo Extend for reducing data costs. There’s even the musicMagpie app for generating cash by recycling and selling on games and old CDs and DVDs.

And for any student who has a niggle that they’re spending too much on coffee, diet Coke or beer, they can scare themselves silly with Martin Lewis’s Demotivator. Punch in your non-essential item of expenditure, the unit costs and how often you buy it and Martin’s demotivator calculates how much that adds up to each year and across a working life.

If it’s a caffeine habit you have for example, then the demotivator is quick to flag up that just one medium sized Americano from Costa on the way to lectures and a couple over the weekend will cost a student £803 a year and £36,135.00 over their lifetime.

Students are smart and, with budgets under pressure, they are highly motivated to use all the resources out there to keep their finances on track. And many students will have their smartphones loaded up with a range of apps to help them manage their budget.

Its good news that students are using the array of financial management apps at their disposal and bodes well for future financial responsibility.

Are Students Missing A Trick?

But I wonder if they know, as they download scores of cool apps onto their phones, that the millennials and their parents’ generation too, may be one step ahead of them?

You could say that Castlight Financial’s Affordability Passport is, in essence, a whole lot of these cool apps all rolled into one. The Affordability Passport uses the same open banking technology as the digital banks and some of the budgeting apps, but instead of totaling up the numbers in a defined area of spending such as utilities bills, the Affordability Passport is able to categorise transactional spending across multiple personal accounts, categorising spending into 155 categories and a further 29 categories for income.

The Affordability Passport is powered by Castlight’s CaaS (Categorisation as a Service) software which is currently the most powerful categorisation engine in the UK. And now that it’s being widely used by the UK’s High Street banks, there are hundreds of thousands of UK customers who should feel pretty smug that, whatever numbers their student children may be crunching with their budgeting apps, its not nearly as cool as 155 categories of spending analysis.

Progress Through Technology – Castlight Financial and HSBC UK Join Forces

Progress through technology. Castlight Financial support HSBC UK to deliver their first open banking loan

Ask any car enthusiast why their dream car might be an Audi and they’re very likely to say the brand has a reputation for innovative design and cutting edge technology. Dig a bit deeper and they’re also likely to rate Audi’s reputation for reliability and customer service.

So, I have to admit to being pretty delighted that the very first HSBC UK customer using Castlight’s affordability technology secured a loan to buy their dream Audi.

This is clearly a customer who knows a thing or two about design, technology, reliability and customer service!

Open Banking in Action

So what has actually happened here? As you’ll know, PSD2 or open banking came into force in January this year. Many UK banks weren’t ready for the revolution that is open banking. But some were and the Castlight team have been working closely with HSBC UK to get ahead of the game. So this week we were ready – our affordability technology CaaS or “categorisation as a service” was tried, tested and ready to go. So when the HSBC UK customer took up the offer to be the first customer to apply for a loan using open banking technology, it was all systems go.

The customer securely linked their bank account to HSBC UK, who used their open banking technology to pull down all the transactional data. HSBC UK then ran the transactional data through the CaaS engine, which categorised income and expenditure into 155 categories, summarising income streams, credit commitments, essential costs and discretionary spending to reveal a monthly disposable income. The information was then merged with credit performance data and in under 10 minutes HSBC UK had all the information they needed on which to make a highly informed lending decision. The process also eliminated the need for the customer to produce bank statements and payslips to comply with money laundering regulations as all the information was there in the CaaS report.

CaaS was able to provide their underwriters with enhanced data direct from the customer’s bank account, whilst giving that customer a better, faster service. And its good news for Castlight, as more and more lenders both in the UK and globally start to recognise the importance of enhanced affordability technology like CaaS, and use it to ensure that loans are safe and affordable for both lenders and borrowers.

Progress through technology. It’s an approach that works for Audi and it’s certainly working too for Castlight.

Embracing the Spirit of the Law

Martin Hagerty, Castlight Financial’s Chairman, once defined company culture to me as “the things people do when they know they’re not being watched”.

I like that definition. Because it doesn’t just apply to companies. It applies to whole industries too. Read more