In the developed world, financial institutions use credit history in order to assess a person’s creditworthiness and subsequently issue them financial products at personalized terms. Unfortunately, that’s difficult to do in emerging markets, where mobile phones are more prevalent than traditional credit history.
Cignifi, a Cambridge, Mass.-based company, provides credit scores for people without traditional credit histories in order to enable them to get access to credit and banking services. Today, the company announced it has closed a second round of funding, of an undisclosed amount, led by eBay founder Pierre Omidyar’s investment firm with additional participation from American Express Ventures and others.
Cignifi is part of a recent wave of companies seeking to use non-traditional data to model a person’s creditworthiness (Affirm, Klarna, Paidy, etc.). But since it operates in emerging markets, it relies solely on data that is readily available, that is, mobile phone behavioral data. Moreover, Cignifi says that it can calculate a person’s score with as little as four week’s calling history.
The company also says that while it uses mobile phone data, it doesn’t use “location data or content information from voice calls or texts” in order to protect people’s privacy from financial institutions (imagine if a bank knew what a person discussed during their phone calls).
“Omidyar Network is pleased to extend and deepen our relationship with Cignifi, an innovative big data company that is helping a broad base of financially excluded mobile phone owners meet their credit and insurance needs,” said Arjuna Costa, investment partner at Omidyar Network in a statement.
“This latest investment fits squarely into our Financial Inclusion Initiative, which works to provide underserved consumers with the financial services and products they need, with the respect and dignity they deserve. Using mobile data, Cignifi’s behavior-based credit scoring platform has the potential to fundamentally transform the financial services paradigm to one that is more responsive to the needs of emerging market consumers,” he said.
Cignifi is currently working with mobile carriers and financial institutions in Brazil, Ghana, Mexico, and Chile, among other locations. The company has additional offices in Sao Paulo, Mexico City, and Accra, Ghana.