MICROCAPITAL BRIEF: US-based Startups First Access, Cignifi Analyze Mobile Phone Usage to Measure Creditworthiness of Unbanked

A number of startup companies are employing analytical techniques based on “big data” to interpret the mobile phone usage of poor people to assess the creditworthiness of those applying for loans in developing economies. First Access, a US-based technology startup, reportedly has launched a cloud-based service in Tanzania that examines various factors related to the mobile phone usage of potential borrowers, including: the frequency of replenishing airtime, the types of data packages purchased, the number of text messages clients send, the timing of their calls and the manner in which clients interact with social networks. This data is then analyzed and interpreted using proprietary algorithms used to predict loan applicants’ creditworthiness. Cignifi, a startup company based in the US city of Cambridge, Massachusetts, follows a similar business model and operates in Brazil, Chile and Mexico.

For an unspecified per-transaction fee, these companies become intermediaries in the loan underwriting process. Through a series of mobile phone-based transactions – that require the consent of the applicants – they cross-reference the results of their proprietary analysis with the risk-profile requirements of the lender and offer real-time recommendations on applicants’ creditworthiness and loan sizes.

According to a statement attributed to Mr Jonathan Hakim, Cignifi’s chief executive officer, the objective of these programs is to “…bring down the cost of acquiring customers [for lenders] and screen out people who are unlikely to pass the underwriting test.”

By A’kos Szebeni, Research Associate

About First Access

First Access is a technology startup company that is headquartered in the US city of New York. The company offers internet-based analyses of demographic, geographic, financial and social aspects of clients’ mobile phone usage to predict credit risk for borrowers in informal markets. First Access’ customer base includes retail commercial banks, microfinance institutions, insurance companies, agricultural input suppliers and business payment platforms operating in emerging economies. Data on the size of the firm are not available.

About Cignifi

Cignifi is a US-based startup company that offers a behavior-based analytical tool that scores the creditworthiness of potential borrowers in emerging economies. The tool uses proprietary algorithms to analyze mobile-phone usage to create a risk profile that can be used by lenders in their underwriting process. Cignifi is headquartered in the US city of Cambridge, MA and has satellite offices in Sao Paolo, Brazil; Oxford, England; and Mexico City, Mexico. Data on the size of the firm are not available.

Sources and Additional Resources:

American Banker, “First Access, Cignifi Use Big Data to Bring Economic Security to the Unbanked,” http://www.americanbanker.com/issues/178_246/first-access-cignifi-use-big-data-to-bring-economic-security-to-unbanked-1064537-1.html?zkPrintable=1&nopagination=1

MicroCapital, October 29, 2013, “Airtel, Tanzania Postal Bank (TPB) Partner to Offer Mobile Banking Services,” https://www.microcapital.org/microcapital-brief-airtel-tanzania-postal-bank-tpb-partner-to-offer-mobile-banking-services/

MicroCapital, October 22, 2013, “Airtel, EcoBank Partner to Provide Mobile Money Services in Africa,” https://www.microcapital.org/microcapital-brief-airtel-ecobank-partner-to-provide-mobile-money-services-in-africa/

MicroCapital, August 28, 2013, “Bharti Airtel, MicroEnsure Launch Mobile Microinsurance Service in Africa,” https://www.microcapital.org/microcapital-brief-bharti-airtel-microensure-launch-mobile-microinsurance-service-in-africa/

MicroCapital, May 14, 2013, “Inter-American Development Bank Promotes Psychometric Testing for Screening Loan Applicants,” https://www.microcapital.org/microcapital-brief-inter-american-development-bank-promotes-psychometric-testing-for-screening-loan-applicants/

MicroCapital, April 22, 2013, “Younger People in Kenya More Open to “Game Changer” of Buying Investment, Insurance Products by Mobile Phone,”
https://www.microcapital.org/microcapital-brief-younger-people-in-kenya-more-open-to-game-changer-of-buying-investment-insurance-products-by-mobile-phone/

MicroCapital, October 13, 2012, “YuMobile, MicroEnsure, Jubilee Insurance Partner to Offer Life, Disability Insurance to Mobile Subscribers in Kenya,”
https://www.microcapital.org/microcapital-brief-yumobile-microensure-jubilee-insurance-partner-to-offer-life-disability-insurance-to-mobile-subscribers-in-kenya/

MicroCapital Universe Profile: First Access, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=First+Access

MicroCapital Universe Profile: Cignifi Group, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cignifi

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