The short-term loan disruptor ‘Wonga’ began UK trading over 17 years ago, and back in 2007, the online loan provider was truly ahead of its time. The original team behind the pioneering loan platform was actually comprised of staff with roots in the gaming industry; their lack of deeper knowledge into the credit industry would prove problematic.
The business approach at this time focused on revenue optimization as priority number one, contrasting sharply with sustainable credit industry goals. This misalignment proved critical and was a major factor in the UK’s eventual collapse into administration. A leadership overhaul at this time ushered in Brett Van Aswegen to take over the South African division of the personal loan business.
What follows is Brett’s insight into the myriad of challenges he and his team faced to pull Wonga out of the fire in the face of imminent closure from financial administrators.
Brett is quick to acknowledge both the previous successes and missteps of the brand’s legacy. The original team at Wonga made notable errors that damaged the brand’s reputation in the UK. However, they also pioneered a revolutionary paperless, real-time loan application system, establishing Wonga as one of the earliest fintech innovators.
Embracing Regulators as Teammates
Despite Wonga South Africa’s compliance with the 2007 National Credit Act, political pressures and negative associations with the UK division overshadowed its local operations. The new CEO was acutely aware of the existential threat to the South African branch. Brett requested six months to turn things around.
On his first day, an inspector from the National Credit Regulator arrived. Working under parliamentary pressure, they were intent on shutting down Wonga internationally. Van Aswegen immediately engaged with them, presenting the company’s compliance and commitment to ethical practices at rapid pace.
He proposed retrospective loan affordability checks, an unprecedented move in the industry, to demonstrate Wonga’s intent to make things right. This willingness to integrate with regulators and absorb them into the team fabric helped to build credibility and trust. Within three weeks, all required changes were implemented, significantly reducing Wonga’s revenue by a staggering two-thirds: the equivalent of chopping off two legs (and an arm) to save the rest.
Reinventing Customer Engagement & Core Values
With immediate regulatory closure abated, Wonga South Africa focused on extensive product surveys and engaged in focus groups to better understand their customers. This research was crucial in shaping their strategy and redefining the brand’s purpose. Uniting the team was crucial; Brett involved them in developing this purpose statement and integrated the ‘old guard’ into the transformation process.
The motivation was not driven by shareholder profits but by creating value for South Africa and the broader community. The aim was to solve real problems for customers, not just to be another micro-lender.
A purpose statement was crafted that aligned with the positive aspects of Wonga’s disruptive origins while addressing current market needs. The old company model relied heavily on high advertising spend, operating on a ‘churn-and-burn’ method. The new strategy focused on creating a relevant product, transitioning from payday to short-term lending. This allowed customers more time and greater flexibility with loan repayments. This change aimed to reduce dependency on Wonga’s product and foster sustainable lending practices.
Reflecting this pivot in customer relationship, Wonga shifted away from heavy out-bound marketing spend to laser focused digital campaigns, prioritising a more relevant and sustainable product for consumers when it was urgently needed.
Successful Rebirth & New Challenges
To thrive, Wonga had to redefine its system’s strengths and identify areas for partnership enhancement. This re-engineering required a complete platform rebuild, coinciding with a significant shift within the Wonga group.
The Dublin engineering team was disbanded, necessitating the assembly of a South African team to redesign the platform and launch new products within two years. By the end of 2017, the new product and platform were in testing. By March 2018, the first campaign with the revamped offering launched, tripling application volumes in the first month. This marked Wonga’s significant progression from mere survival to active growth.
However that summer, in the face of severe regulatory issues, the UK group entered administration, cutting off funding entirely. This sudden liquidity crisis, just as the new South African product gained traction, presented a significant challenge. Over the next 16 months, Brett navigated a complex process to save the business and initiated a local management buyout.
Bringing in partners who played a pivotal role in this acquisition was crucial to success. Fortunately, the team managed to acquire the business in December 2019 and began trading independently as Wonga Online (Pty) Ltd.
Positioning Wonga for the Future
Having led Wonga South Africa for eight years, Van Aswegen found the journey challenging yet rewarding. His goal is to help the business realise its full potential. He recently completed a vision board to clarify future goals, including thinking about how to mould talented team members to lead. He thrives on building and overcoming challenges, not maintenance, and his role at Wonga will evolve as the company continues to grow.
Financial inclusion presents a significant future opportunity for Wonga. In South Africa, Approximately 60% of adults have access to formal credit, while 40% rely on informal credit markets i.e. the loan shark industry pervasive at the most vulnerable socio-economic level in South Africa.
Wonga aims to help this excluded segment gain access to safer and more sustainable credit by using alternative data sources and machine learning. These tools can make credit decisions for those without established credit records, providing them with their first access to regulated credit and building a bridge towards greater financial inclusion.
Wonga’s transformation has been about more than survival – It created a sustainable, customer-centric business that balances the needs of all stakeholders. By focusing on purpose before profit, building strong partnerships, and driving financial inclusion, Wonga is positioned for long-term success. This journey reaffirms the company’s commitment to providing valuable financial services and maintaining leadership in the fintech space.
