The amount of money we have in the bank determines what we can spend. It’s obvious isn’t it? Or is it? What if we are moving towards a future where the currency isn’t pounds and pence but data?
Think about it. Our ability to access finance is not entirely representative of the salary we earn or the assets we currently possess. Finance providers use powerful software to aggregate and digitise a whole range of data on our credit and spending histories and the result of this process is an asset – some more valuable than others.
At Castlight, we believe the day is coming when an individual’s financial profile, the digital picture of what and where we spend, borrow and repay will be the data that defines our personal capital or what we’re worth financially. Phil Grady – CEO, Castlight Financial
So just like we’re used to checking our bank statements, we are going to need to start keeping on top of our financial profile. And because this financial profile is going to be what opens doors and lets us make our way in the world – we believe its more than just a profile – its a passport.
As consumers we will have to be responsible for keeping our financial passport up to date. And its not going to be difficult because we’re already used to checking in and keeping up with the minutiae of our digital lives. Just like we check social media or the fitbit, we will check in with our financial passport to ensure that we are maintaining healthy, financial digital housekeeping.
Real time rewards
So what will drive consumers to create and maintain a digital financial passport? We believe that the financial market is fast moving towards a model where customers will be rewarded for the more real-time information they can provide to financial services providers. The more financial services providers can access instant, up-to-the-minute data on a customer’s finances, the better the deal they will be prepared to give them. So, by keeping a digital financial passport bang up to date, consumers will have access to cheaper financial products, lower APRs, a broader choice of financial products, easier access to switching from higher priced/less competitive products and financial products that provide the best value for money. In short, a financial digital passport could very well lower the owner’s cost of living.
Globalisation and fintech
Globalisation has transformed many business sectors – our current international trading environment for instance would have been unrecognisable a generation ago. Yet in the area of finance, there is little evidence of globalisation. Genuine financial freedom of movement is dragging its heels, lagging far behind other sectors.
You only have to ask immigrants who have come to the UK from overseas or ex-pats who want to return home, to fully appreciate that for them there is no global financial market. The problems they endure accessing finance or credit reflects the fact that there is no global sharing of financial data and information.
It doesn’t seem right that we can take our medical records from one country to another yet, for most people, our financial profile or ‘records’ is not recognised and cannot be carried forward if we move between countries.
So, given the current lack of financial globalisation and transferability of financial data, imagine if this could be overcome and the financial sector gets to catch up with other business sectors?
Digital financial passport
We have created a consumer version of a digital financial passport, which aggregates all the available financial data belonging to a consumer onto a distributed ledger, which we’ve called the Affordability Passport®.
That means the consumer’s data is now their responsibility. They need to check it and maintain it and in turn, it will be their currency. It will be the currency of the future – so much more powerful than their bank statements. And it will enable fairer pricing by underwriters, responsible lending/borrowing and unlimited access to financial providers regardless of the country from which the data was initially originated.