The Surprising Effect of 2020 on the Online Lending Industry | James Williams from Wonga

Andrew:

Hi everybody, this is Andrew again on OfferForge’s podcast. Today we have a gentleman by the name of James Williams. He is from Wonga, ladies and gentlemen.

So, James, hi there, how are you doing?

James:

Yeah Andrew, well and yourself?

Andrew:

I’m alright, thank you. Thank you so much for joining us and taking out the time to have a chat with us.

James, we actually have a couple of questions that I would like to find out from your side. The first question is for somebody that’s been staying under a rock: What does Wonga do? 

James:

So, we’re a fintech that’s focused on short-term consumer lending. We offer loans from R500 up to R8 000, repayable from four days over up to six months. Our services are fully online and offered via our website wonga.co.za, so there’s no need for branch visits or any need to sit in a queue in a call centre or anything like that to take on our loan services and that is really our core focus.

Aside to that we also have a financial literacy platform called ‘The Money Academy’ and the intention of this is to help people improve their financial well-being. And we made use of video-based tutorials to help people focus on the four pillars of personal finance namely: debt, saving, budgeting, and investing.

Andrew:

Okay, that’s wonderful. So how long have you had that going, if I may ask?

James:

So, The Money Academy has been around for approximately three years now. Just over three years. We are in the process of sort of re-skinning it and just bringing it right up to date. And you know, hopefully by age two this year we’ll have that out.

Andrew:

Wonderful stuff, can’t wait for that. The history behind Wonga’s name; would you care to take us through that?

James:

Interestingly, Wonga is actually slang for “money”. This stems from the UK, particularly London’s East End. It originated from a Romanic word “wanga” which actually means coal. People were casually interchanging the term money and coal in sort of the 19th century in England, so the word itself is synonymous with money in the UK. I think in Nguni languages however the word Wonga is akin to status, prestige or perhaps an accolade and I’m sure as you’re aware, is often used in South Africa as a name.

Andrew:

Very true, very true. I reckon that’s why we wanted to find out what the origin of the name is or where it is from.

So Wonga in the UK is not related to Wonga in SA, right?

James:

Wonga South Africa was part of the Wonga group, which had lending operations in the UK, Spain, Poland, Canada, Germany and South Africa. But in late 2018 the Wonga group went into administration and the South African entity was actually unbundled as part of that administration process. So as of 2020 Wonga South Africa or Wonga online as our business entity is known became a fully South African-owned and fully South African-managed, separate entity from the Wonga group.

Andrew:

Wow okay, now that’s awesome. How do you choose the people that you give credit to? You know, what sort of criteria do you guys put out?

James:

As a responsible lender we have to adhere to lending regulations stipulated in the national credit act. The typical types of things that we would consider are: loan affordability, so in other words does the customer have the affordability to comfortably repay their loan? We would gauge that through looking at their income and expenses. We also would look at their credit history, such as their external debt commitments at the credit bureau with other credit providers.

And then there’s also a few prerequisites, namely: you have to be 18 years old; you have to have a regular form of income; you have to have a South African ID number; and then lastly, a South African bank account with one of the major banks.

Andrew:

Okay, it’s well understandable in that regard. So James, 2020 happened and a lot of companies saw the worst time
ever. How did you still manage to stay relevant and afloat?

James:

Interestingly, you know when coronavirus landed towards the end of march 2020 we were expecting quite a lot of trouble in terms of the lending industry, both from a risk perspective as well as an uptick in demand, but in fact we actually saw the opposite.

We saw declining demand and our hypothesis for that was that people, because they weren’t traveling as frequently, they weren’t able to spend as freely, you know, going out to restaurants and so on, they actually had more disposable income. Which enabled them to see themselves through any financial emergencies which they may have had.

And then coming out of that period, as we’ve seen lockdown levels decrease, we obviously saw demand returning to more recent levels or pre-Covid levels, I should say. So I think the way that we’ve navigated that is just through keeping our ethos of responsible lending, ensuring that we don’t lend to customers that can’t afford to repay comfortably.

Yeah, that’s where we’re at at the moment.

Andrew:

So has that, in turn changed your business model a bit or sort of tweaked it a bit?

James:

One of the things that we’ve started doing since becoming a separate entity from the Wonga group is being able to steer our own ship. From a product perspective we’ve been able to make changes quickly to our product to align with what customer need is. So that might be changing the loan terms for new customers for example to be more in line with a product that matches their credit type, if you will. 

Andrew:

That’s wonderful to hear. So quick question: Are you a spender or a saver?

James:

I think I’m a bit of both. I do have kids and you know, that’s where the spending element comes in. Often having to fork out for sports uniforms and all sorts that goes along with having teenage boys.

But then, in terms of saving, one of the great things about being involved with the money academy project was, it really got me to look inwardly at those four pillars of finance and it almost forced me to practice what we’re preaching. You know, really start looking at budgets, drawing up a budget and sticking to it and so that really brought it home to me.

Andrew:

That’s awesome to hear. I have another question: If I gave you R10 000 or R100 000, if not a million, how would you spend it?

James:

One thing that I would suggest with a large amount like a million is definitely invest it into some form of appreciating asset. Now, whether that be stock to start up a small side gig, or potentially invest in some property. Those would be the things that I would consider for a larger amount like a million rand.

Andrew:

So you wouldn’t blow it on toys, hey?

James:

Luckily I wouldn’t. My boys have outgrown toys. The only difference now is they call their toys gadgets and they’re a lot more expensive

Andrew:

It’s well understandable, I reckon. Are you more of a beach person or are you more of a bush oke?

James:

A bit of both, really. So, I actually grew up in Mpumalanga, which is very much the typical Kruger park area. But you know, now being based down in Cape Town I obviously do enjoy the beach days down here. With the caveat that the sea is freezing cold.

Andrew:

Oh jeez, that’s understandable. Currently, what books are you reading?

James:

I’m honestly not a massive reader, and that’s mostly because of time constraints. A book that I’m flipping in and out of at the moment was written by Stephen Clark it’s actually called “A thousand years of annoying the French”, which is a-

Andrew:

Awesome title!

James:

It’s a satirical look at the relationship between England and France and going all through back history from the Battle of Hastings all the way up to modern times, and just taking a really light view and humorous view of that relationship.

I think, just in terms of timing to find time to read at least; one of the things I’ve replaced that with is listening to podcasts on my commute. So a few that I listen to relatively avidly is Fintech Insider, which is like a bi-weekly Fintech podcast and most recently they’ve been covering a lot of the developments in the UK around open banking and how that’s changing digital finance and payments. Super, super interesting.

And then, of course, my other go-to is Lex Friedman, who has some great guests chatting about AI, machine learning, robotics, etc. 

Andrew:

Now I’ve definitely got that on my bucket list. Well, I’d say lastly or rather, I’ve got like three other questions to go.

First one is: You’ve been working with OfferForge with their affiliate program since 2019. How has that journey been for you?

James:

Yes, I think it’s been really
amazing to work with OfferForge. OfferForge has been pivotal in us, or helping us with the transition from coming from the group structure and then forging our own path as a South African entity.

I think we have been in, or have had an active affiliate program for around eight years. Certainly, working with OfferForge has been tremendous, great reporting tools and so on. And also some really good feedback  from affiliates themselves that filter through to us via the team.

Andrew:

Okay, that’s wonderful to hear. Like we mentioned before rather in the introduction, that this is also going to be a video that’s going out to the affiliates: What makes your brand unique, so they would be able to jump onto your offer and run with it?

James:

Yeah, so I think we’ve built the Wonga brand up as a credible lender in the fintech space.

I think more recently, since becoming independent we have become a purpose-led organization which really places emphasis on customer value over profit. So we see profit as an outcome of getting it right, rather than like a target on the bottom line of a budget sheet. And I think that gives us a distinct advantage in the way that we do things perhaps over our competitors.

The other one is, over the years we’ve invested really heavily in the Wonga brand and certainly punches above its weight from all of the research that we’ve done in terms of brand recognition and recall. Even compared to some of the major banks that have absolutely massive marketing budgets.

Andrew:

Very true. Awesome stuff. I like that answer. 

Lastly, why should publishers join our affiliate program and run with Wonga?

James:

I think for a few reasons. As mentioned already, we’ve been active in the affiliate space for eight years, so we’ve got a lot of experience in terms of the offering side in the affiliate space. As mentioned as well, we’ve built up this awesome brand that’s very well known in South Africa and I think another part of that is, we’re a strong believer in relationships. So we’re looking to build long-term partnerships with our affiliates. And I think the whole idea around that is so that we can create a feedback loop, share ideas into new suggestions that affiliates might have and really try to work together to make a success out of it.

I think in terms of affiliate payments: so at last check we did offer some of the best rates in terms of the short-term lending space from a new customer acquisition point of view.

I think one last just general comment on that is also, with lockdown coming into force toward March or April last year we’re seeing mass online adoption of e-commerce through people or from people at least, that maybe were digitally savvy, so they might have had like a Facebook account or an Instagram account, but always had a bit of an apprehension to transacting online. A lot of these people have almost been forced down the route of shopping online, banking online and so on as lockdown got worse. So you know, we’re starting to see this in our numbers and I think there’s great opportunity there for an affiliate to enter the finance vertical and take advantage of a new way of doing things.

Andrew:

Well James, thank you so much. That was actually the last question that I had for you and I’m just gonna be signing out. Thank you all so much for having this sit down with us and discussing Wonga and a little bit about yourself. Pretty awesome, thank you so much for everything.

James:

Andrew, thanks so much for the opportunity.

Andrew:

It’s all my pleasure, hey. Ladies and gentlemen, that was James Williams from Wonga. Thank you so much for having
a sit down with us. Cheers!

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