Image via CrunchBaseThe regulations surrounding financial services are quite correctly stringent but have evolved for a very different era. They require all loans to be expressed as an effective APR (Annual Percentage Rate) - even if the loan is for 14 days - or 7 or 30.
It also includes any application fee (Bank's generally call these 'arrangement fees' - in commercial lending) and transmissions fee (for same day - or in Wonga's case, instant transfer) to be included as interest within the APR.
An example. if you borrowed £100 to tide you over for 14 days, you'd pay back £120. Wonga charges £20 to process the loan, transmit the cash, collect it and take the risk of non-payment - all for £20.
Wonga explains the APR question nicely on its website.
This APR issue has made Wonga a controversial brand - loved by many hundreds of thousands but misunderstood by some - and an easy target for those not ever likely to use the service.
I have gotten used to the visceral reaction of some on the social web to seeing the Wonga TV ads (latest version is below) and the APR in the thousands - but every now and then I notice people from the tech industry rushing for the moral high ground and shouting foul.
Why is Wonga one of the stand out successes of the internet?
[Europe's fastest growing company, according to GP Bullhound's Media Momentum Awards and still growing at around 500%]
- It solves a very real and large problem - not solved elsewhere with the speed, convenience, flexibility and honesty that Wonga does.
- Its customers really love it! With a NPS of around 79, there are very few brands that match it. I have been involved closely with some brands that elicited great loyalty and affection from its customers - none quite like this. 90% of respondents who had used another lender agreed that Wonga was a better service (30% ‘better’ and 60% ‘significantly better’).
- The product is backed up by a determined customer service ethos which strives to be open, responsive and flexible to the needs of the customers - via a multitude of channels.
- Lending decisions are made in real time referencing over 3500 data points and analysed in Wonga's proprietary risk engine.
- The technology which makes all this possible is world class.
- To be a customer of Wonga, you need to have a bank account.
- 99.7% of Wonga's customers own a mobile phone.
- 17% own an iPhone
- Wonga sponsors Blackpool FC in the Premier League
Errol Damelin, Jonty Hurwitz and the team at Wonga are building a business to be proud of. I, for one am proud to be its Chairman.
Image by Wonga.com via CrunchBase
