FINANCIAL services may be one of the sectors the modern Scottish economy was built on, but a decade on from the financial crash that embroiled some of its biggest names in scandal the sheen has come off it.

Phil Grady wants to change that.

Having launched Glasgow-based fintech business Castlight Financial in 2014, Mr Grady believes the advent of the open-banking revolution could put Scotland back on the financial map again.

“I was in New York and walking through Central Park I saw statues of Scottish people who had made a big difference in the world,” Mr Grady, who is Castlight’s chief executive, said.

“I thought, how did we lose our confidence as a nation?

“I don’t do politics but I would love to build a world-class business that changes the way in which financial services is done in a country that is credited with creating how banking is done.

“Open banking is an amazing opportunity for businesses like ours to make our mark in the world again.”

Launched at the start of this year, open banking is essentially a secure system that allows companies operating in the financial sector to access potential customers’ current account data once they have been given permission to do so.

The idea is that if providers can see information relating to customers' spending habits it will help them to innovate, which in turn will lead to more competition in the market and better outcomes for consumers.

Innovation is certainly something Castlight takes seriously.

Indeed the business’s technology has been designed specifically to revolutionise the way consumers’ suitability for credit is assessed by not only taking account of credit ratings but factoring in spending habits as well.

The aim is to give a fuller picture of people’s ability to service debt than traditional credit scoring can.

So while Castlight does use credit-history data, it complements that with information on how individuals spend their money and what their total income is to create what it calls an affordability passport.

While this has been designed to give credit providers and consumers a much better picture of how much debt an individual would be able to take on, it is also intended to open up the credit market to those that are locked out due to either poor or non-existent credit histories.

This could include those already paying for high-cost credit products as well as people such as former services personnel who, due to the nature of their work and the housing that comes with it, have been unable to build up a financial footprint in the UK.

With more and more people using debt as part of their everyday financial planning, Mr Grady feels it is essential that the market takes a much more “holistic view” when making lending decisions.

“If people are in debt providers want to know their financial position before taking a debt position with them but we saw a sector being driven by greed and fear and wanted to change the context,” Mr Grady said.

“I was previously involved in the personal insolvency sector as COO of Creditfix, where I was dealing with people who were insolvent and were looking for the bankruptcy laws to protect them.

“That gave me the view that people who fall into debt have experienced a life-changing event - that could affect any one of us.

“The way the current financial system is set up it would be marked as derogatory debt on your credit file and it would sit there for six years but a lot can change in those six years - you might have missed a credit card payment, but could have gone on to win the lottery.”

Castlight, which unusually for a technology business is approved by industry regulator the Financial Conduct Authority, has been profitable for the past two years and Mr Grady believes the scope for future growth is limitless.

“We want to take this international,” he said. “We’re working with a couple of companies right now and we’re at very interesting stages of negotiations with them.”

Last year Castlight started providing its technology to mortgage distribution business Paradigm Mortgage Services. The firm’s affordability passport combines its customers’ data with credit reports provided by Equifax, allowing Paradigm’s brokers to get an instant picture of what clients are going to be able to afford.

Mr Grady said a number of insolvency practitioners and debt advisers are also using the technology while four high street banks are currently “going through proof of concept” with it.

While Mr Grady admitted that “to go international” the business, which has so far been funded by Mr Grady and co-founder Pearse Flynn, the chief executive of Creditfix, would need to take external cash. Until it gets to that stage Castlight is focusing on broadening out its product offering.

With its small staff made up of a team of graduate data scientists and software engineers, who Mr Grady said “want to be part of a business that leaves the world better than they found it”, new ideas the business is exploring are centred on helping young people get on top of their finances.

The intention is to use the Castlight technology to encourage people to be sensible about debt and engage with saving from an early age.

“I’d love to give the application away to 18 to 21 year olds,” Mr Grady said.

“People are now more conscious of their disposable income position and they don’t spend what they can’t afford. If you get into debt then make it manageable debt, not acute debt because debt is fine if it’s affordable.

“We’re also interested in the gamification of financial services. People are excited when they do their 2,000 steps - why not get excited by saving £200?”

All this fits in with what Mr Grady called Castlight’s vision of “embracing a safer financial world”.

“Everything is about that,” Mr Grady added.