Gambling & Debt Crises – News we could have Avoided

Two financial news stories broke this week which have particularly saddened me. Two tales of situations where the financially vulnerable in our society have suffered unnecessarily, perhaps even been exploited. And this is heartbreaking, as the human pain and suffering could so easily have been prevented.

Two Issues

An online gambling site has been fined a record £7.8 million by the Gambling Commission for failings that allowed problem gamblers to continue racking up debt, even although they had opted to self-exclude by asking the bookie to block their bets. The Gambling Commission reported that the company had failed “to recognise visible signs of problem gambling behaviour.”

In the same news cycle, Citizens Advice were reporting that 1 in 5 people struggling with debt have seen their credit card limit automatically increased. Worryingly, the charity claims that 18% of cardholders with financial problems had seen their credit limit increased without consultation, compared with 12% overall. Reporting on the story, Kevin Peachey, the BBC News’s Personal Finance correspondent, went on to say that poor affordability checks by lenders were making people’s financial situations worse and quoted Gillian Guy, Chief Executive of Citizens Advice saying:

“It is clear that irresponsible behaviour by some lenders is making people’s debt situation worse – such as offering more credit when they already have thousands of pounds of unpaid debt.”

One Solution

I’ve talked about Castlight’s Affordability Passport® regularly in these blogs and of course, any consumer and lender partnership working together through the Affordability Passport® to consider finance options, will be acutely aware of any overspending issues.

However, Castlight’s Categorisation as a Service tool, or CaaS®, is another hugely powerful tool, but this time specifically developed to help banks and lenders know all their customers’ financial DNA, their individual strengths and vulnerabilities in microscopic detail.

Technology for Change

CaaS® takes bank customers’ transactional data and processes it through the CaaS® neural net. This neural net has been “trained”, by processing 80 million transactional records, to recognise 155 categories of discretionary and non-discretionary spending and automatically sorts every transaction into the appropriate category. The process is so sophisticated that it can report the tiniest nuances of financial behaviour. If the transactional data of anyone with debt or gambling issues was to be run through CaaS®, any vulnerabilities or potential problems would have been picked up long before they caused too much damage, and the customer helped back onto a path of financial responsibility.

At Castlight we brought together hugely complex algorithms, groundbreaking disruptive technology and the brightest data scientists we could find in order to create CaaS®. And I am so glad we did what we did, when we did. Not since the financial tsunami of 2007, has there been so much financial uncertainty and so many financially vulnerable souls in our society. CaaS® is offering banks and lenders a tool to help them step up and take on the new opportunities of open banking – but perhaps more importantly, the new responsibilities they have to the financially vulnerable too.