Castlight Brings Clarity to Consumer’s Financial Capability

In the UK, when selling financial services, lenders and financial advisors need to know if a customer can actually afford the product. Whether it’s a loan or investment product, Castlight Financial provides credit and financial information about a particular customer, and paints their complete financial picture through aggregated data.

Under the current system, borrowers have to provide three separate income statements and the institution checks their credit history with credit reference agencies. It’s a long, involved, and cumbersome process that can take days and weeks.

But Castlight Financial is able to change all that, and get things done in minutes. It’s the ultimate financial capability checker, providing a real-time, immediate snapshot of a person’s financial position. Rather than waiting for credit reference checks and income statements, Castlight provides credit information, as well as a person’s spending habits, disposable income and financial capability.

What makes our product special is that we’re able to find real-time credit information, we have greater transparency and accuracy around a buyer’s real disposable income, and it’s all provided in real-time, which speeds up the underwriting process. Ultimately, this helps keep customers from buying financial products or taking on loans they can’t afford, which in turn helps them avoid falling into serious debt. It also saves financial service providers from promoting and selling products that their customers can’t afford.

Other populations we serve are people without any credit information, such as anyone in university or the armed forces, anyone who is wealthy or a recent immigrant. People in these groups sometimes don’t have credit, so lenders can’t make an accurate or informed decision.

The old system is broken and tends to fail students, the military, the wealthy, or newly arrived – but Castlight is able to serve these groups with the help of Envestnet® | Yodlee®. We’re able to look at up-to-date transactional data, and get a more accurate view of what these customers can do and afford.

We have been using the RESTful Envestnet | Yodlee Aggregation API for at least five months now. Since then, we’ve performed thousands of searches on behalf of consumers, and have done most of our work in the traditional debt sector. We recently added new financial data via Envestnet | Yodlee API to help consumers understand what their net disposable income was. That was the pilot that helped launch Castlight Financial, and now we’ve cast out to a much wider financial landscape. The new version of Envestnet | Yodlee FastLink is a significant step forward in adaptive and user friendly design for the mobile age.

We’re able to obtain real-time affordability analysis and provide all the consumer’s financial data in a single data feed. This includes data points on customers and transaction data within their bank accounts. We give them the data feeds they want on their financial information, and we can provide it to any lender, broker, or consumer who needs it.

Our goal is to bring responsible borrowing and lending to the industry, for both sides – consumers and financial services. With Castlight Financial, everybody sees exactly the same thing, and consumers will understand why they’ve been turned down for a particular loan. In the past, a consumer could be rejected and not know why. Our services makes offers transparency to both parties and avoids any sticky situations.

It also changes some of the formulas and practices of traditional lending. For example, in the UK, if you’ve had a loan default, it sits on your credit report for six years and keeps you from getting many other types of loans.

But let’s assume that over the last four years, you’ve had a very positive income. Under the old system, you could still be denied a loan for your default. But if you can show that you’ve had a very positive income for the last four years, your lender can take a much more precise view of your financial picture and make a better, more informed decision based on a 360 view of your financial situation, and not just the past history.

To learn more about Lending Innovation and how we’re leveraging technology and data to provide real-time credit information and speed up the underwriting process, join this Finextra webinar on July 7th: https://www.finextra.com/featurearticle/2108.