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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.”

Bank of England Turns Spotlight on “Pocket of Risk”

The Bank of England’s news release, following its September Financial Policy Committee (FPC) meeting, warned that whilst the overall domestic credit environment was pretty stable, there was a “pocket of risk in the rapid growth of consumer credit”. Read more

Mark Carney is Right

A few weeks ago, I used this blog to welcome Mark Carney’s warning that families are seriously over-indulging on car finance and credit card debt. And this week, the Castlight team were delighted to see two pages of the The Sunday Times newspaper reporting on Bank of England initiatives to demand more detailed information from lenders on how they approve loans. Read more

Credit Too Thin? Get to the Core of the Problem

I’ve talked about pizza before in one of my blogs but maybe I failed to mention that thin crust is best. And that the best thin crust I’ve found is at Paesano in Glasgow’s city centre.

In fact, thin is quite often seen to be a good thing. Kate Moss and Victoria Beckham have built careers on it. Steve Jobs’s mission in life was to make his i-things thinner and thinner. And no self regarding espresso would ever want to share saucer space with a fat chocolate mint would it? Read more