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Wishing You a Happy and Affordable Christmas

Every year statistics are published highlighting how badly we get ourselves into debt over Christmas and how long it takes us to recover. The numbers aren’t out yet as there’s more damage still to be done online and in the High Street. There’s still more plastic to smoulder.

But what I’ve found this year, in the run up to Christmas, are lots of websites suggesting innovative (and sometimes glaringly obvious) ways to save money at Christmas. I like the idea of stuffing a big cardboard box full of balloons for a toddler or concocting homemade bottles of rosemary infused olive oil for adults. There seems to be a whiff of nostalgia floating around the internet, a retro yearning for simpler times and maybe even a game of charades?

Pressure to Overspend

And it’s all good. We all need to resist the pressure to overspend on presents and then buy Christmas themed things we don’t need. Like a Christmas jumper. Who started that? And why have I got one?

But in amongst the thousands of words on line about the damaging effects of overspending and the creative ideas for keeping things simple, it was the voice of Lucy on Mumsnet that made me think.

“Unfortunately this month we don’t seem to have much money spare. I had put some money aside but due to an issue with my car that’s all gone.


 There is 9 people in total to buy for.


I’m spending roughly £20 – £30 per person but it will mean I have to use my credit card. I’m so careful with money normally and try to never use my credit card so I just feel like there’s a massive weight on my mind.”

Financial Blip 

Lucy hadn’t overspent this month. She’s careful with her money and she had specifically saved for Christmas. But her car broke down and her budget unravelled. Lucy is not alone – she speaks for thousands of families across the UK, who are just one financial blip away from debt.

These are the people for whom many of Castlight Financial’s products have been developed and which are now being widely used by some of the UK’s biggest banks. CaaS (Categorisation as a Service), CastScore and the Affordability Passport are all designed, in their different ways, to help banks and other financial institutions support customers who might experience a bump in the road. They provide lenders with unprecedented levels of information and insights into a customer’s finances, so that they are able to get a 3D picture of a person, their life, their financial behaviours and spending patterns and support them through difficult times of the year, like Christmas.

Thank You

I hope Lucy has a bank account with HSBC or one of the other financial institutions who use our affordability tools. Because if she does, she won’t need to tell them that she’s normally so careful with money. They will already know that. And that ability to really know  their customer means much greater financial security for Lucy, not just in December but all the way through the year.

We are proud of our affordability products and the positive impact they have had on thousands of people’s lives this year. I am confident that next year we will make even more progress. And my dream is that no-one will post messages of financial desperation on Mumsnet ever again.

Happy Christmas to everyone who has shared this blog year with me – thank you for your interest and support.

And for those of you I might see over Christmas, I hope you like your olive oil infused with rosemary?

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.

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

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.

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

Castlight Financial, Big Issue Invest and Advice Direct Scotland launch fintech tool

Today (5th June) Castlight Financial, the Glasgow-based financial capability company, Big Issue Invest (BII) and Advice Direct Scotland (ADS) launched a tool that will empower people struggling with debt by providing them with access to their own data. Read more

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