Why we all love Wonga ... all who know it that is.

Image via CrunchBase

Wonga.com (Wonga = English slang for cash) is a web phenomenon. It started offering small cash loans on the web 2.5 years ago, setting out to solve an important and pressing need that many have for emergency or instant cash in a very simple, clear, open WYSIWYG way - in fact, in a way which is entirely culturally compatible with the internet.

The 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.

Little known facts about Wonga.

• 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

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Following an extensive beta test of the service during which 50,000 customers were served, Wonga.com has now launched. Wonga offers a new source of fast credit, without the long-term commitment associated with bank loans, overdrafts and credit cards.
The premise is simple, the customer inface clear and easy but the technical execution extremely complex.

Wonga is offering a service that could not have been provided pre-internet. Loan applications are processed in real time and, if approved, funds are transferred to the customers account within minutes. Its about as close to instant cash as it can be.

The service does not compete with Bank Loans, Hire/Lease Purchase or other larger amount finance packages - initial loans are restricted to just £200. When might one want a Wonga loan?
The service has been designed to appeal to anyone who experiences the occasional ‘Wonga moment’ - such as an urgent time-sensitive purchase, an unmissable social event, emergency repairs or a shock bill.
Errol Damelin, founder and CEO of Wonga, has a neat way of positioning it. "we're not the cheapest way to borrow money, but we provide a service that's much faster, more convenient and flexible than anything else out there. It's much like a black cab, which might not be an economical way to get around on a regular basis, but you get a fantastically fast, convenient and secure service on the occasions when a bus or tube won't do."

The central ethos of the company is openness and simplicity. The customer is informed of the cost in a clear way and is able to choose precisely how much they want to spend. Like in many other service industries, the Wonga customers are willing to pay a premium for a high level of service and the instant response which only it can offer.

The back end processes and the number of 3rd party integrations needed to make this all so simple for the customer has been anything but trivial. Wonga uses a sophisticated and proprietary credit decisioning system to assess every application -its only interested in lending to people whom they believe can reasonably afford to repay their loan without undue financial stress. All these features are in contrast to many internet or high street lenders who offer little or no flexibility, few or no credit checks and large fixed fees.

Errol explains: “Banks and other lenders are weighed down by tradition and complexity. People have come to expect rigid terms, realms of paperwork and slow decisions - particularly in recent times with the increasing pressures of the credit crunch. So a frequent reaction to our service has been amazement at the speed of our process."
Wonga also operates a trust system, similar to community-orientated sites like eBay, whereby new applicants are initially limited to borrowing up £200 but can increase their credit limit by using the service responsibly over time.

Errol and his partner, Jony Hurwitz, have a number of further innovations to the Wonga service in the pipeline which promise to add more value to Wonga customers soon.

Wonga employs 37 staff in London with a development team in the Ukraine, and is backed with venture capital from Balderton Capital, TAG and Kreos Capital.

Read the Guardian article which features an interview with Errol for further information.

Oh yes! Almost forgot. The company has also won a string of awards (including "entrepreneur of the year" from Credit Suisse sponsored National Business Awards, SE region) and been shortlisted for others.

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