Wonga to 'disrupt' SA credit market

2012-05-16 14:20
SA Wonga CEO Kevin Hurwitz plans to disrupt the local credit market. (picture provided)

SA Wonga CEO Kevin Hurwitz plans to disrupt the local credit market. (picture provided)

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

kalahari.com

Cape Town - A new player in the microloan industry says it plans to disrupt the market by offering completely automated loans online.

"When we set out, I think there definitely was the intention to be disruptive, not that we knew how it would pan out, but looking back five years, I think that's exactly what has happened," SA Wonga CEO, Kevin Hurwitz, told News24.

He conceded that the microloan industry had come under increasingly tight scrutiny, but the company sees itself as a technology firm in the credit market.

Wonga offers small, short-term loans and users of the website can see all the charges related to a particular loan upfront before applying with an interactive slider that calculates charges based on user preference.

"There's been lots of national dialogue in countries around the world about the financial services industry and really, what we're trying to do is be very consumer focused," Hurwitz said.

High volume

The Webby award winning company has made waves in the UK market as a high-volume lender. It has made loans to the value of £1bn and Hurwitz hinted that the entry into the South African market was part of an expansion strategy.

"Up until now, Wonga has been one product in one market and we're now looking to be multiple products in multiple markets."

Loans in this sector attract a high interest rate and Wonga charges 60% per annum, but loans are typically paid off in less than 40 days for amounts under R8 000.

Hurwitz said that the speed of the loan granted - about 10 minutes in the UK - made the service an alternate to credit cards, but to ensure minimal risk, the firm only granted about 25% of the applications and default rates in the UK were under 10%.

The company would not share the technology used to help determine whether an applicant was credit worthy, but hinted that data formed the heart of the process.

"We're very data hungry - what we like is raw data - we analyse that very well; we'll get raw data from anywhere and build this into our models.

"That's our secret sauce; I'm not going to divulge that. Our competitors would love to know that information - five years down the line in the UK, guys are still trying to get access to that data," Hurwitz said.

Availability

Wonga defended that cost of credit on the platform, saying that the availability would offset the cost of using it.

"We're not looking to build or offer the cheapest product - generally there's been a nuclear race to the bottom in terms of costing and that's not what we're about," said Hurwitz.

The website uses "public access data points" to monitor consumer behaviour and mitigate against default and the automated process could effectively screen out the majority of fraudulent activity.

"The risk and fraud analysis uses thousands of public access data points. So this [is the] whole notion of affordability when it comes to consumers' risk.

"We're also very conscious of the fact that out of 100% of people that are going to apply, you're going to get people that are going to lie to appear more credit worthy. Our system discounts that by looking at this consumer as a whole," Hurwitz added.

Wonga is registered with the National Credit Regulator and has been granting loans in SA since October 2011 to test the platform.

The company also freezes interest charges after 90 days if a customer has defaulted on the loan.

"We're comfortable if people are using us four to six times a year; we're very uncomfortable if people are using us 12 to 14 times a year and we actually monitor that," Hurwitz said.


- Follow Duncan on Twitter
 

Read more on:    internet
NEXT ON NEWS24X

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
1 comment
Add your comment
Comment 0 characters remaining
 

Inside News24

 
 

Zille: Only DA can challenge ANC in F State

The DA is the only party that can challenge the ANC in the Free State, opposition party leader Helen Zille says.

 
 

Latest elections multimedia

Why Jack Parow wants you to vote on 7 May
The ad the SABC doesn't want to air
Elections 2014 in one cartoon
This year's election posters
 
Traffic
Lottery
 
  • Monday Paarl - 17:32 PM
    Road name: N1 Inbound
    BUSY CONDTIONS at Huguenot tunnel - EXPECT DELAYS
  • Monday Camps Bay - 17:27 PM
    Road name: Victoria Road Northbound
    DELAYS though central Camps Bay area
 
More traffic reports...
 

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Escape winter, head to Mauritius

Escape winter by spending 7 nights in Mauritius' tropical bliss from R13 215 per person sharing. Includes return flights, airport transfers and accommodation. Book now!

Kalahari.com - shop online today

Get many eggs in one basket!

Gaming bundles: 2 Super Hits games for R99, 3 Disney games for R99 and more + exclusive accessory bundles only available on kalahari.com. While stocks last. Shop now!

25% off bestselling books!

The Real Meal Revolution by Tim Noakes, Jeffrey Archer’s Be Careful What You Wish for, Man’s Search for Meaning by Victor E. Frank and many more titles. Shop now!

Up to 25% off electronics

Buy top electronics and save up to 25%. Such as kalahari.com’s 1# selling product the gobii eReader, Patriot X Porter flash drive, Asus Nexus 7” 3G tablet, Samsung Galaxy SIII, Lenovo G580 Notebook and many more. Shop now!

DStv HD PVR Decoder now R949

The DStv HD PVR Decoder has further revolutionised the television experience with lifelike viewing, sharper images, more vibrant colours and precision picture quality. Now R949, save R550. Offer valid while stocks last. Shop now!

Up to 30% off appliances & homeware

Save up to 30% on appliances and homeware this Easter! Offer valid while stocks last. Shop now.

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

BlackBerry Torch 9810

The BlackBerry Torch 9810 gives you the powerful combination of...

From R2815.00

I'm shopping for:

Horoscopes
Aquarius
Aquarius

There may be a break through, either through quiet contemplative time to connect to your deep side or forced on you by...read more

There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.








Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.