The following is a guest post by Jonathan Hakim, President & CEO of Cignifi, as part of the series on airtime based credit scoring. Also read part 1 and part 3 of the series.

The Cignifi behavior-based scoring platform leverages behavioral analytics and data from mobile phone users to understand the response and risk levels of prospects and customers. For financial service providers, Cignifi scores enable profitable customer targeting, acquisition, and retention. For mobile network operators, sales of credit products linked to the mobile phone can serve to further deepen relationships with their customers.

How it works

An individual’s mobile phone use is not random. On the contrary, it is highly predictive of behavior. The Cignifi analytics platform uses leading-edge mathematical behavior models to develop consumer scores based on large volumes of mobile usage data. Anonymized call records and text messaging patterns are combined into behavioral and time-dependent attributes, which are in turn used to generate scores. Cignifi scores do not use any content from voice calls or texts. They are optimized to protect the privacy of end-mobile phone users while giving underwriters enough information to make decisions.

Traditional credit scores typically require payment history over twelve months or longer to forecast credit behavior. By contrast, Cignifi scores can be calculated with as little as one month’s calling history. Because the underlying raw data is constantly evolving, the scores are dynamic and able to leverage the resulting behavior patterns on a monthly basis. The Cignifi scores are highly effective decision keys for pre-paid customers. Pre-pay accounts for over 80% of mobile subscribers in emerging markets and they are typically new entrants to the formal financial system.

Oi Telecom pilot

In 2011 Cignifi partnered with Oi Telecom in Brazil on a pre-commercial pilot of Cignifi’s credit scoring platform. Oi is the mobile telephone subsidiary of Tele Norte Leste (TNE), Brazil’s largest telecommunications company.

The Pilot was conducted with data from pre-pay mobile customers located in 21 cities in the north-east of Brazil,, one of the poorest regions of the country with very low levels of financial penetration.

The Cignifi scoring models were built from detailed mobile phone records for 2.7m pre-pay customers. They were then tested against loan and payment data from a portfolio of 40,000 virtual credit cards issued to a set of those same mobile customers by Oi Paggo, the financial products subsidiary of Oi.

Key results:

• Cignifi Risk Score is a significant discriminator of default risk.
• Cignifi Response Score is a significant indicator of customer response.
• The scores offer lenders a substantial opportunity to improve portfolio returns through a combination of lower defaults and reduced customer acquisition costs.
• Mobile customers using the Oi Paggo credit were significantly more loyal telecom customers and spent more on their phone service than their peers.

For more information visit www.cignifi.com