WONGA SA
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WONGA SA
Gaining
Credit PRODUCTION: Colin Chinery
What went Wronger with Wonga? was just one searching question in the re-structuring of the online instant payday loan giant. How it repositions and grows are others. “We want to play a long-term sustainable role in this local market, putting the consumer first, and at the heart of what we are doing,” says CEO of Wonga South Africa, Brett van Aswegen. “We are now at a very exciting position.”
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INDUSTRY FOCUS: FINANCE
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In 2006 two South Africans set up what was to be a gamechanging business in Britain. For entrepreneurs Errol Damelin and Jonty Hurwitz success came quickly: the controversy later. Their baby was the online instant payday loan company Wonga. Within a short time it had become sector market leader, and by 2012 had opened an operation in South Africa, its first outside the UK. Spain and Poland were to follow. But by then Wonga had run into trouble in the UK, accused of prioritising its ambitions for growth over its customers. The furore reached a peak in June 2014 when Britain’s regulatory body, the Financial Conduct Authority, found Wonga guilty of unfair and misleading debt-collection practices, and ordered the company to pay £2.6m compensation (R43.16m) to 45,000 customers. Unsurprisingly, a new transformation management team took over, with strengthened governance and expanded product offerings part of the ensuing clean-up operation. “We are right up there with the banks,” reported Group Chairman Andy Haste, “still seen as a trusted brand by our core audience.”
// WE WANT TO PLAY A LONG-TERM SUSTAINABLE ROLE IN THIS LOCAL MARKET, PUTTING THE CONSUMER FIRST AND AT THE HEART OF WHAT WE ARE DOING // BRAND-TRANSFORMER Here in South Africa, Wonga had a very different reputation at the time, as a legitimate financial services provider assisting clients with short term cash flow issues in a responsible and transparent manner. Even so the brand-transforming tide was hitting its shores, and in 2015 Brett van Aswegen moved in as the new CEO of Wonga South Africa. van Aswegen, former Managing Director of Cards for afb - pioneers in unsecured credit in Africa - is passionate about the ‘new’ reputation of the company and its phased reformation. “Some of the things that went wrong in the UK market never happened in South Africa. South Africa has a different credit regulatory environment, with different legislation on issues such as the interest rates charged. “We have moved from Wonga 1.0 in the UK, where there were some
regrettable tactics, to Wonga 2.0 with a new management team and strategy, and on to Wonga 3.0, with a fresh reputation, trustworthy nature and international reach.” Since his arrival he has headed a comprehensive turnaround strategy to create a resilient, responsible lender with wide appeal. “We have introduced lots of changes at Wonga to make sure we offer better, fairer loans to customers. “Over the last two years we have reconsidered our value proposition to our consumers, and spent an incredible amount of time and money in research to help us to better understand our consumers and how we can help them.” Fintech - financial software technology – is one path. “In the past, a lot of time was spent trying to manage a monolithic platform. Now we want to spend 80% of our time redeveloping the technology and the experience of the user.” PURPOSE BUILDING It has also been a period of selfanalysis. “We asked ourselves, what is our purpose? There needs to be a purpose behind our company, otherwise we are just another loan provider. We want to play a long-term sustainable role in this local market, putting the consumer first and at the heart of what we are doing. And we saw that operating a single income performance business was never going to perform as a long term strategic business.” Wonga Group’s success – it remains the UK’s market leader - was to make an effective transition from being a start-up disruptor into a
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WONGA SA
// WE HAVE INTRODUCED LOTS OF CHANGES AT WONGA TO MAKE SURE WE OFFER BETTER, FAIRER LOANS TO CUSTOMERS //
Brett van Aswegen - CEO
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INDUSTRY FOCUS: FINANCE
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+27 12 368 4900 INFO@DIRECTTRANSACT.CO.ZA
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legitimate industry player, says van Aswegen. “It was one of the first in the UK to be given a licence by the Financial Conduct Authority, probably because it had already begun to structure the necessary changes to secure compliance, and this has transcended throughout all out regions.” Adhering to statutory obligations, and going beyond that, is written into Wonga South Africa’s new mindset and online approach. Loan offerings of up to R4000 for new customers and up to R8000 for existing customers - now with six months to pay – are ring fenced with applicant checks – stringent affordability checks, bank detail verification and last three months proof of income - and prudent advice. “Please think very carefully before you apply,” cautions the Wonga website, “because we expect you to repay us when you promise to. If you have any doubts or are unsure you’ll be able to do that comfortably, please don’t apply in the first place.” With South African consumers currently owing more than R1 trillion on home loans, cars, store and credit cards, the need for financial planning basics is hardly misplaced, with Wonga launching an on line ‘Money Academy’ to provide financial literacy training via a series of short videos. “One of the areas that was frustrating people was having access to educational material,” says van Aswegen. “Here in South Africa we have very well educated people and also those who struggle to read complex problems - and some financial documents are really complicated. Educating people about their finances will lead to lowerrisk customers in future, says van Aswegen. “We need to take collective responsibility for the financial health and well-being of consumers. Being responsible in our approach to credit provision is the first step towards
WONGA SA
Africa, and a look at our neighbouring countries is a very obvious next step. The means of operation would be very similar to South Africa, and the ability to move into those countries is fairly seamless. “If you look at the African continent as a whole, there are some really exciting opportunities out there. Do we want to grow there? For sure. But it’s a big continent, and some markets are more developed than others. We would be selective, making sure we have the right capability to build each of these markets in the same responsible way that we would in any other part of the world.” ensuring a stable and sustainable credit market in South Africa.” CREDIT NAÏVE? Is credit too easy to obtain? “I don’t think anybody has a simple answer. Credit should clearly not be used to support someone gambling, for example, but credit is being used for many positive things, and there are far more positive than negative stories. “Negative stories do highlight the problems across every single country where credit is offered. But look at it more broadly and you see there are so many people who are really responsible with their finances, using credit only when they need to, and to propel them forward in their lives. Wonga-positive case stories are publically showcased; the parents
// IT’S NOT JUST ABOUT OFFERING A LOAN, IT’S ABOUT HOW DO I TREAT YOU AS A CUSTOMER OF OURS, HOW I LEAVE A POSITIVE IMPACT IN YOUR LIFE? //
who took a loan to fund a pre-entry equipment shortfall for their child who was awarded a university bursary, the man who took a loan when his housemate moved out unexpectedly and he needed to cover the rental shortfall, the daughter who bought a special medical mattress and comforts for her infirmed father. “Access to cash flow has made a difference to many lives, and these are just some examples of people struggling with cash flow who are far from being irresponsible. “We see a much bigger role around responsible lending. It’s not just about offering a loan, it’s about how do I treat you as a customer of ours, how I leave a positive impact in your life? “I know this sounds a bit lofty but it’s very much part of the principle behind what we are trying to do here. We are not just a lending business; we are playing a role in somebody’s life.” Will van Aswegen - who built Kenya’s first retail credit operation, developing strategic partnerships with some of its largest retailers - consider taking Wonga north of South Africa’s borders? “We have an incredible amount of opportunity to build a very strong and stable business here in South
NO JOURNEY’S END The process of re engineering and changing an organisational culture “is not something that can happen overnight,” says van Aswegen. “It’s really tough. I have walked a long journey over the past three years and it’s been far from easy. “But we are now at a very exciting position in our business. We still have a long journey ahead of us, with many things we need to improve. “We have a purpose behind us in this business, and understanding what that purpose is, provides us with a long-term vision of where we want to move to. “Where we are today is a very different from two years ago, and it’s a very exciting place to be. Two years ago our focus was on what was behind us; we had problems to deal with and fix and restructure the business. Now as we take a lot of lessons with us, the focus is on Forward.”
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April 2018
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EXCLUSIVE INTERVIEW WITH OASIS WATER MANAGING DIRECTOR, MYNHARDT OOSTHUIZEN
Taking Finest Quality Purified And Oxygenated Water
Where It Is Needed Most
ALSO IN THIS ISSUE:
Rolfe Laboratories / Wonga SA / NFB Financial Services / RussellStone Group
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APR IL 2018