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Building a more inclusive financial world

I love working with Lord Bird and The Big Issue. They are great guys and they sure know how to pick a venue for a financial inclusion summit. For a Glasgow-based company, we don’t get many podium opportunities at the Houses of Parliament, but last Thursday, there we were.

Fabulous though the venue was, it was the message and the conversations we had afterwards that were the real star attractions.

Puncturing the Poverty Premium

Lord Bird and The Big Issue team, Martin King, Head of Vulnerable Customers from Lloyds Bank and our own Castlight Financial team – we were all there to talk about how we could work together to secure financial inclusion and set about puncturing the poverty premium.

Lord Bird kicked off the evening and, as he does, cut straight to the chase. He reflected on the problems his Irish mother had, 45 years ago, keeping track of scant money and said:

“That is one of the problems of poverty. You lose the ability of finding out who you owe to. It’s the idea that you cannot control your incomings and your outgoings. And if someone can come along and help you, and guide you through that with fintech solutions, it’s really useful.”

Lord Bird went on to speak about the financial mess that people living in poverty can get into, or the “sticky stuff” as he called it. He talked about The Big Issue Invest, which focuses on providing emergency relief or implementing coping strategies, but also the very real need for prevention work, led by Big Issue Invest. He said:

“We have to have the prevention work. And the prevention work is stopping people falling into the sticky stuff in the first instance. In the second instance it’s getting them out of financial vulnerability by using fintech, by using data, and by using methodologies that everyone can understand, and that everyone can use. We are moving into a fintech world where we can help to dismantle poverty in the lives of the most needy people by using technological advancements to do transformative things”

Need for Affordability Tools

I hadn’t seen Lord Bird’s speech before I spoke, but it was as if we’d both sat down and written our speeches together. Lord Bird spoke about “very simple things’ that make a difference. And I started off by explaining the need for affordability tools and just how simple the concept of affordability is:

“At the very heart of the last credit crunch there was a disregard for affordability. There weren’t affordability tools available for people to make real time affordability decisions. No-one really knew what affordability was. We set about trying to build products that nailed that. It’s a really complicated formula by the way – you take somebody’s income, you deduct their expenditure and you get their disposable income. Everyone says to us ‘why has no-one else thought of this?” I can’t answer that.”

Of course, the fintech is state-of-the-art, AI-driven open banking technology, but the idea is simple. And it’s also inclusive. We have used the affordability technology to launch The Big View with Big Issue Invest, to help people in debt understand and resolve their financial problems.

And as I went on to say, The Big View is not the only financial inclusion product we have created which makes us proud:

“We’ve created the first open banking score. Why did we do this? 18 months ago, we realised that there are 5.2 million people in the UK that have ‘thin’ credit files. They could be immigrants or migrant workers, but what we’ve seen is an increasing trend in the business that millennials are credit adverse. Why? Because they’ve lived through times where they’ve seen their parents scarred by a credit crunch. But in order to get a good credit rating they are encouraged to take out debt. That’s counter intuitive. Why would you want to do that? We set about building products which take people’s personal data and build credit risk models on that. And we’re delighted to say that a lot of firms working with us and pushing us out. I’m grateful for that.”

Barriers to Financial Health

Martin King was next up, and his job title alone is testament to the concern of Lloyds Banking Group for all their customers. Martin King is Head of Vulnerable Customers at the bank and he and his team should be very proud of the work they are doing to remove barriers to financial health for thousands of their customers.

As the evening ended, and Lord Bird burst into song, to get our attention and move us off, and to let staff get ready for the next day, I was thinking about Castlight Financial’s vision of “a safer financial world”. Maybe we should all be thinking more about “a safer, more inclusive financial world?”

Something to set our sights on as old and new friends, sharing this same vision, drifted off to a local pub to talk some more.

Looking forward to the Financial Inclusion Summit in Westminster

We’re looking forward to Thursday’s Financial Inclusion Summit in the Houses of Parliament with Lord Bird. It’s an exciting opportunity for us to talk about The Big View, our fintech tool which gives people with debt concerns access to a version of Castlight Financial’s affordability tool. Since it was launched earlier this year, in partnership with the Big Issue Invest and Advice Direct Scotland, advisers have been helping people get the bigger picture of their finances, by using the Big View’s data and interpreting the findings. Equipped with new financial insights the advisers have then been working with their debt clients to create pathways back to financial stability. The Big View is working, it’s making a difference.

So this Thursday we are hoping the summit will encourage debate and the sharing of ideas amongst finance professionals who believe, like we do, that financial technology has the power to be redemptive, to give people another chance.

One of those like-minded finance professionals is Frank Cooper III, BlackRock’s Global Chief Marketing Officer, and who has recently discussed how financial services can be used for everyone, not just the elite few, to become more knowledgeable about their finances. He delivered at keynote at the recent Money 20/20 Revolutionary Stage, “Is There Wealth Beyond the Wealthy”,  and so much of what he was saying chimed with Castlight’s mission. Where we at Castlight talk about redemptive technology, Frank Cooper III was talking about the importance of empathy in financial technology. We are singing from the same hymn sheet.

This is what he said about the power of financial technology to help people:

“I think for us to really connect with a wider range of people so that more and more and more people have access to what we call wealth we need to step up the way in which we connect with people, the way we intuit how they think, feel and act, putting ourselves in their shoes.

I think we can leverage technology to actually expand empathy and understand people better.”

Financial technology tools like the Big View, can crunch through data and provide the behavioural insights that help us understand exactly how people think and feel and act. It allows to us do what Frank Cooper suggests – and put ourselves in someone else’s shoes.

And financial technology can certainly be leveraged to help us understand people and people to understand themselves. We share that passion with Frank Cooper.

But we have a tool that can transform understanding and empathy into practical help and solutions. Our redemptive technology can actually put people back on the path of financial wellbeing.

That’s a big responsibility. And that’s why we are thrilled to have the opportunity at the Houses of Parliament to share our ideas and listen to other people’s as we explore together how financial technology can make the world a better place.

Frank Cooper III is right to be excited about the potential for financial technology to change behaviours and help ordinary people become more financially stable. I wonder how excited he would be if he knew that here at Castlight Financial, we are already doing it and have a fintech tool already being used by individuals who are financially squeezed, struggling or debt-laden. And that it’s helping them back on the path to financial health and back to the lives they want to lead.

Because The Big View can track back through historical transactional data, it allows an individual to identify problematic financial behaviour which needs to be addressed or areas where simple changes in patterns and behaviours could significantly improve their financial wellbeing.

We like to think of it as “redemptive technology”, the kind of fintech that uses some of world’s most cutting-edge categorisation software to address one of society’s oldest problems.

So Mr Frank Cooper, if by any chance you are passing through London next Thursday, you would be very welcome to join us! And when you hear what we have to say, I think you might be tempted to jump out of your seat in excitement too!