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
Great essay Robin.
ReplyDeleteI am so glad to see you talk about Net Promoter Score - very few people in our industry know about it yet it is the most powerful way to determine if your customers like your service. I am a big believer in the one question.