ONS and Castlight track consumer spending

Women’s leggings and mashed potato will now be used instead of pork pies and lager sold in nightclubs to help calculate the cost of living in the UK. These changes, reported by the BBC, are part of the Office for National Statistics’ (ONS) annual review of the basket of goods used to measure the UK’s inflation rate.

The ONS measures the price movements of 700 goods and services across 20,000 UK outlets each year in order to calculate the changing cost of living. And each year, the basket is reviewed to ensure that it is accurately reflecting contemporary habits and technology.

That might sound like a hefty piece of research, but our technology’s data capture goes even further. The AI behind our Affordability Passport and our CaaS (“categorisation as a service”) tool has processed hundreds of millions of transactions in the last 18 months and has been “trained” to recognise 155 categories of discretionary and non-discretionary spending across customers’ accounts.

Our categorisation tool is so powerful that by analysing tens of millions of bank transactions we could report on not just how much gym wear has been bought by millions of customers, but whether it was bought in Sweaty Betty or Sports Direct.

A Powerful Tool

This is the kind of transactional data that makes our Affordability Passport so powerful. For every customer looking for a loan, the information we are assessing is not just a snapshot of a shopping basket, it’s a 360 degree picture of the income coming in and precisely where that income is spent. The Affordability Passport builds a profile of affordability through categorising a potential borrower’s discretionary and non-discretionary spending and then merging the results with credit performance data to reveal whether a particular loan or mortgage is affordable and safe.

Exercise leggings might have made the ONS inflation basket for 2018 and that’s an interesting indication of increasing investment in health and fitness. But Castlight’s Affordability Passports’ insights have much more far-reaching implications. The Affordability Passport for instance, would be able to tell a customer applying for a loan that the £80 they are spending on their gym membership each month might be all that’s preventing them from securing the mortgage – and home – of their dreams.

And that’s the kind of information that gives switched on brokers and lenders the level of detail they need to make the fast and safe lending decisions that will help their customers secure loans, but crucially, only the loans they can afford.

And who knows, they may even find the wriggle room for their customer to afford the loan – and the Sweaty Betty leggings too.