LeapFrog Investments has acquired an undisclosed stake in Cignifi, a big data platform that aims to extend financial inclusion to one billion emerging consumers.

LeapFrog is partnering with Omidyar Network, which is increasing its long-held investment in Cignifi. 

Headquartered in Cambridge, Massachusetts, Cignify has developed the first big data platform to deliver credit and marketing scores that currently profile more than 100 million consumers in 13 emerging markets, using mobile phone behaviour.

Stewart Langdon, Partner at LeapFrog Investments, said: “Cignifi is doing something incredibly important. 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,” he said.

With over 90% 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.

Cignifi has developed a proxy for conventional finance-based credit scoring using non-financial data, such as mobile calling and texting patterns, the routine of being at a workplace or home, and regular contact with reputable borrowers.

The investment will drive further scale in the reach of the Cignifi business.

“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 adjacent categories such as insurance.”

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 $2.1trn to $2.5trn.

Cignifi 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, Asia and Latin America.

Omidyar Network has backed Cignifi since 2012. 

Arjuna Costa, Partner at Omidyar Network, said: “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.”

“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,” he added.