Big Data Platform Plans Aims to Extend Financial Inclusion to One Billion Emerging Consumers
- LeapFrog Investments and Omidyar Network, the investing firm of eBay Founder Pierre Omidyar, invest in Cignifi, a big data platform powering large-scale financial inclusion
- Cignifi’s mobile-generated algorithms have created financial profiles for over 100 million people in 13 emerging markets, putting credit and insurance within reach for people lacking credit scores
- The company demonstrates the growth potential of mobile technology companies delivering financial services to low-income consumers in emerging markets
- According to World Bank, fewer than 1 in 10 people in low- and middle- income countries have a formal credit history1; over 2 billion have mobiles but limited access to financial services
- Cignifi has grown rapidly through strategic partnerships with leading global brands including Telefónica, AT&T, Globe Telecom, Equifax
- Cignifi’s Board includes former CEO of FICO, the leading provider of consumer risk scores in the US
London, United Kingdom, 22 June 2017: Vital access to financial services for two billion underserved people in emerging markets comes a step closer today as LeapFrog Investments announces its acquisition of a stake in Cignifi, a platform creating financial profiles through mobile phone data.
LeapFrog, the pioneer in profit with purpose investing, is partnering alongside Omidyar Network, the philanthropic investment firm created by eBay Founder Pierre Omidyar, a long time investor in Cignifi. The investment will drive the further scale and reach of the Cignifi business.
Cignifi is poised to help meet the needs of more than two billion emerging consumers worldwide who have mobile phones but limited access to financial services. The company has developed the first big data platform to deliver credit and marketing scores that currently reach more than 100 million consumers in 13 emerging markets, using mobile phone behaviour.
With over 90 per cent of the population of low- and middle-income countries lacking a documented credit history, billions are left in the “Catch-22” of being denied access to formal financial services because they’ve never taken out a loan. Without a credit history, they fall outside of the traditional financial industry’s architecture of credit scoring to assess risk.
“This investment underscores the ability of mobile enabled financial services to scale up rapidly, reaching billions of consumers, and driving vast social impact throughout emerging markets,” said Jonathan Hakim, Founder and CEO of Cignifi. “LeapFrog will accelerate our ambition to reach one billion people in emerging markets by supporting Cignifi’s growth strategy and expansion into adgacent categories such as insurance.”
LeapFrog brings significant experience in rapidly scaling mobile technology companies that delivering financial services to low-income and underserved consumers. Existing portfolio companies such as BIMA, the global leader in providing insurance through mobile technology, and Jumo, Africa’s first mobile money marketplace, have quickly grown to reach over 300 million consumers combined.
“Cignifi is doing something incredibly important,” said Stewart Langdon, Partner at LeapFrog Investments. “Up until now, the world’s low-income consumers have had a very hard time borrowing money because they don’t have credit histories. Cignifi addresses this through a machine learning platform that integrates with the world’s most accessible infrastructure – mobile networks – to give people a digital identity. This financial technology has the potential to revolutionise how we assess the creditworthiness of billions of people globally and drive down customer acquisition costs.”
Cignifi has developed a proxy for conventional finance-based credit scoring using nonfinancial data, such as mobile calling and texting patterns, the routine of being at a workplace or home, and regular contact with reputable borrowers. Using mobile data as a substitute for traditional credit scoring opens up an enormous social and commercial opportunity. McKinsey and the IFC estimate that the unmet need for credit among emerging markets businesses alone is worth $2.1 trillion to $2.5 trillion.
The company has achieved fast growth by partnering with some of the world’s largest brands, such as mobile network operators (MNOs) AT&T, Telefónica and Globe Telecom, global banks like Santander, and Equifax, one of the top three global credit bureaus, to offer essential financial services across Africa, Latin America and Asia.
“Omidyar Network has backed Cignifi since 2012 because we are firm believers in the power of big data analytics to lower the barrier of entry for low- and middle-income consumers to the formal credit market,” said Arjuna Costa, Partner at Omidyar Network. “The ubiquity of mobile in emerging markets has opened the door for disruptors such as Cignifi to become the new golden standard of credit assessment and ultimately alter the way we reach and extend credit to consumers who have been traditionally invisible to lenders.”
Headquartered in Cambridge, Massachusetts, Cignifi is led by a management team with extensive experience in mobile technologies, data analysis and emerging markets. Hakim is an industry-leading authority on mobile credit, previously serving as a director at the IFC, a former investment banker at UBS and Lehman Brothers, and The Economist’s banking correspondent.
Cignifi began life at Oxford University, where Peter Grindrod, CBE, a leading mathematician at the University of Oxford’s Mathematical Institute, continues as an adviser to the Cignifi Board. Larry Roseberger, former CEO of FICO, the leading provider of consumer risk scores in the US, is a Director.
About LeapFrog Investments
LeapFrog invests in extraordinary businesses in Africa and Asia. We partner with their leaders to achieve leaps of growth, profitability and impact. LeapFrog companies now operate across 22 markets and reach 106.3 million people. Over 88.5 million are emerging consumers, often accessing insurance, savings, pensions, credit or healthcare for the first time. For more information, visitwww.leapfroginvest.com, @leapfroginvest
The Cignifi platform profiles millions of underserved consumers who lack traditional credit histories, unlocking a massive opportunity to broaden access to financial services. At its core, the company connects two industries – mobile operators and financial services companies. The mobile operators provide data that is then extracted, normalised and anonymised to protect the customers’ privacy. The second stage is to run scoring algorithms that help to understand the risk profile of each customer. In the third stage, banks and insurance companies use that data to segment an entire population by considerations such as risk, geolocation or spending patterns, assisting marketing campaigns to offer appropriate products to emerging consumers. Based in Cambridge, Massachusetts, Cignifi is backed by leading US venture investors and led by a management team with significant data analytics, financial services and global business experience. For more information, visit www.cignifi.com.