OpenWonga

Blog

Welcome to OpenWonga’s blog. This is our view of current issues in the world of technology and finance. Guest bloggers are also welcome to send us ideas or videos for consideration, so get in touch and get involved.

Happy to be judged

Awards

Last week we were shortlisted for a couple of categories in the forthcoming London Loves Excellence Awards and, as always, we were very grateful.

Whether it’s the business itself, or people within it, awards are something we’ve embraced right from the start. Everyone likes winning, but it goes beyond that for us. The majority of articles about us still begin “Wonga, the controversial lender…" so it’s sometimes good to be judged by experts who have taken an in-depth look at the business.

Gushing about winning awards is not the done thing, but we like the balance they bring to the commentary surrounding us. They also plot an interesting and alternative view of our journey to becoming a household name.

Having featured in the Startups 100 and the Red Herring 100 Best Start-ups in Europe back in 2008, we went on to grab Most Innovative Application of Technology at the Financial World Innovation Awards, Online Business of the Year at the Startup Awards and the Outstanding Achievement Award in Financial Services at the IMAs in 2009.

In the same year we won Credit Risk Team of the Year at the Credit Today Awards, were highly commended for Best New Service or Product in Financial Services at the International Business Awards and were also highly commended for Orange Best Use of Technology at the National Business Awards. There was a buzz forming around the brand and we were later featured in the First Tuesday Most Promising Internet Companies in the UK, while being named One to Watch at the Media Momentum Awards.

2010 saw the company top the Telegraph’s 10 European Technology Companies to Watch, come runner up in the Guardian’s Top Media Invest 100, climb to number 8 in the Startups 100, feature in the Smarta 100 and be named Fastest Growing Business in Europe at the Media Momentum Awards.

As the company grew, so did the profile of our founders. Errol had already received a Ruban d’Honneur for Entrepreneur of the Year at the European Business Awards in 2009, and a year later he picked up Digital Entrepreneur of the Year (Digital Entrepreneur Awards), Entrepreneur of the Year (Growing Business Awards) and Founder of the Year (Tech Crunch – The Europas).

But despite these respected plaudits, our focus remained on continual service improvement as the business grew rapidly. It’s an approach that paid off as we won Customer Experience of the Year at the UK Customer Experience Awards, Best Banking and Bill Payment Site of the Year at the international Webby Awards and a Credit Excellence Award in Risk.

Since launching we’ve consistently reaffirmed the belief that we’re a technology business as much as we are a lender, with our 24/7 fully-online, decision-making algorithms laying the foundation for all our products. So it was great to see the Fast Growth Business Awards and Credit Today Awards both pick us out as Best Use of Technology (while naming us VC-backed Business of the Year and Alternative Lender of the Year, respectively, as well).

2011 brought with it our first appearance in the influential Wired 100, a number one spot in the Sunday Times Tech Track 100 and another Credit Excellence Award (this time for Consumer Credit Management). We were also a triple finalist at the Financial World Innovation Awards: Excellence in Customer Service, Innovation in the Delivery of Financial Products and Excellence in Customer Communication. The Fast Growth Business Awards named us Angel or VC-backed Business of the Year, Errol was an Ernst & Young Entrepreneur of the Year and the Guardian’s Digital Entrepreneur of the Year, plus we picked up a special Judges’ Award at the Media Momentum Awards.

By this time the business was changing internally too, with new staff arriving at an exponential rate and Wonga’s reputation in the technology sector attracting some of the world’s brightest talent. Rapidly expanding the number of people is a fundamental challenge for any emerging business, so to be named in the Sunday Times Best Companies to Work For was another landmark moment for us.

Getting this right provided the foundation for us to continue to evolve and 2012 carried on where the previous year left off, with a consecutive top three finish in the Sunday Times Tech Track 100 (the only business to have ever done so to date), a UK finalist place in the European Business Awards and four medals at the Stevie International Business Awards (Customer Service Team of the Year, Executive of the Year – Banking or Financial Services, Most Innovative Company of the Year in Europe, Fast Growing Company of the Year in Europe) all joining the trophy cabinet.

We also won the Risk category at the Credit Excellence Awards for a second time, Fastest Growing Larger Company Award at the Media Momentum Awards, Company of the Year (Large Firms) at the Growing Business Awards and Best Heavyweight Startup at the Tech Crunch awards (The Europas).

2012 was the year we launched our business loan service and developed our e-commerce product, whilst also expanding our short-term loans offering into new countries for the first time.

So when we say we’re humbled and privileged to be nominated for more awards, we mean it. It has been a rollercoaster ride so far and sometimes it’s worth pausing for breath and saying thank you to those who have supported us. It’s great to have objective recognition and we’re proud of what we’ve achieved for a company that is only six years-old. But we never rest on our laurels and recognise we’re far from perfect, which is why we keep challenging ourselves to do even better.

Response by Editor Published: Categories: Wonga Technology Awards

Digital finance company

Recently there have been some comments on traditional and social media sites about why we see ourselves as a digital finance company, and not a payday lender, with the implication usually being we’re in denial or pretending to be something we’re not.

It’s a fair question and we understand why we get grouped in the payday category. It’s an obvious and easy box to put us in and not something we get too hung up on, but we do believe the payday tag fundamentally misrepresents what we do as a business.

Six years ago we set out to offer an alternative to banks and traditional payday lenders. We began with our short-term loans service at wonga.com, so let's start by explaining how this product is different - before moving on to the wider business.

Flexibility

Repayment of a Wonga loan is not tied to payday, nor an applicant’s salary, and we don't lend in rigid amounts (multiples of £50 or £100 are common in payday lending).

We don't charge fixed fees-per-hundred either. Instead we apply daily interest of 1%, with our homepage sliders letting people choose exactly how much they want to borrow and for how long. The daily interest model also means people can repay early (for no extra fee) and save themselves money. We encourage this and nearly a quarter of our customers make use of this flexible feature.

We do not continually extend (‘roll’) loans and have set a maximum of three extensions. The difference between an extension and a rollover is that you can ask for another 24 hours (or any term up to a month) with Wonga, rather than automatically rolling your balance for another full term. We also re-credit check anyone requesting an extension and never guarantee approval.

Less than 1 in 10 loans are extended at all and around 1 in 100 are extended three times, but sometimes people do need a little extra time. Customers must always settle any outstanding interest first, so their balances cannot spiral.

Our short-term loan customers are all fully banked and only 20% have used a payday loan product before coming to Wonga. Payday loan customers are often characterised in the media as having no options, but certainly the majority of Wonga customers choose to use us instead of credit cards or overdrafts.

We are regulated by the Office of Fair Trading (OFT) and are a member of the Finance and Leasing Association (FLA), the UK’s leading trade association for the consumer credit industry - with an established code of practice developed over the last twenty years.

Technology

Traditional payday lenders often make their lending decisions simply based on proof of income. In contrast we spent a year developing the world’s first fully-automated, selective lending platform, which assesses up to 8,000 data points and makes fast decisions without the inconsistency or subjectivity of people judging other people.

The result is we reject almost two thirds of first loan applications, to ensure we only lend to people who we believe can pay us back on time.

The times when we get it wrong are well documented but our technology and our approach is very different to traditional payday lenders and banks, and we use it to process hundreds of thousands of applications every month.

A range of services

The fact is Wonga is both a lender and a technology business and we’re now starting to use this technology to offer a range of transparent finance services, including longer-term business loans and an e-commerce product for online shoppers.

All our services are purely digital (online and mobile) and we have no high street stores, with no sales people or glossy brochures to persuade and convince customers to use us.

So for us at least, digital finance company is a far more accurate reflection of who we are and what we do.

Response by Editor Published: Categories: Wonga Wonga customers Digital