Once embroiled in controversy, Wonga South Africa rebuilt itself through customer-focused innovation, responsible lending, and resilient leadership.
Innovation in technology is growing faster literally by the day, and if you are heading a fintech, you have to be able to make hard decisions fast if you want to survive. This is the secret to fintech Wonga South Africa’s success over the past thirteen years.
Brett van Aswegen, CEO of Wonga South Africa, says that on the day he started work at Wonga in 2015, he realised how true this is when he found inspectors from the National Credit Regulator at his office.
It was a time when Wonga South Africa was under intense regulatory pressure. New legislation was introduced in 2015 that required significant operational adjustments, including stricter affordability assessments. Within a month, Wonga’s revenue dropped by two-thirds.
“We had to make hard decisions fast. Despite the financial hit, these adjustments laid the foundation for a sustainable, customer-focused model. We conducted extensive market research to understand our customers’ needs, using insights to craft a purpose-driven approach.”
Wonga: a UK company with SA values
Wonga South Africa began trading in 2012 as a branch of the UK-based global Wonga Group, which started out as a pioneer in fintech, offering payday loans through innovative digital platforms. However, Van Aswegen says, controversies in the UK driven by questionable practices and a lack of experienced credit professionals caused reputational damage and regulatory backlash.
That is why Van Aswegen started his first day as CEO at Wonga, putting out fires. Fortunately, Wonga’s South African operation differed from the UK operation, with Wonga South Africa following the provisions of the National Credit Act (NCA) to the letter to ensure compliance and responsible lending practices.
“South Africa’s credit environment is sophisticated if you look at its robust infrastructure, including advanced credit bureau data and efficient banking systems.”
The importance of understanding who your customer is
According to stereotypes, Wonga’s average customer would be from lower-income brackets, however the company’s research revealed that, on average, they earned around R22 000 per year. Customers typically borrowed R3 200 at a time for short-term needs and repaid the amount over three months.
Van Aswegen says this debunked the notion of Wonga as merely a payday lender.
The reasons the respondents in the survey gave for borrowing were diverse, from covering unexpected expenses to managing cash flow gaps. For example, people needing funds for university essentials or individuals bridging gaps until their next salary borrowed from Wonga.
Understanding these needs was pivotal in designing products that avoided debt traps and fostered financial stability, he says.
Time to shift the business model
With Van Aswegen at the helm, Wonga South Africa shifted their credit model from traditional payday loans to flexible short-term loans. These short-term loans come layered with additional lending terms and conditions designed to give customers more sustainable options, such as options to repay the loan over three-month instalment windows.
“This approach minimised customer reliance on repetitive borrowing and broke cycles that previously put customers at risk. It is important to balance affordability with accessibility, ensuring that loans are a tool for empowerment rather than a source of financial distress.”
In addition, the company overhauled its technology platform to support this new model. “We needed a system that matched our vision. Outdated technology hampered innovation, but the rebuilt platform allowed for better risk assessment and smoother customer experiences.”
How Wonga stayed resilient despite economic pressures
The economic challenges of recent years, including rising living costs and interest rates, also tested Wonga’s resilience. “While demand for credit remained steady, affordability constraints led to cautious lending practices.
“We prioritise collection rates over volume. Our repayment rate of above 90% repayment rate, even during the Covid-19 pandemic, is a testament to that.
“This disciplined approach ensured stability, enabling Wonga to grow sustainably. It is important to maintain a predictable business model, focusing on long-term customer outcomes rather than short-term profits.”
Yes, there is a dark side to fintech
Van Aswegen acknowledges a “dark side” to fintech, in which predatory practices exploit vulnerable borrowers. While South Africa’s regulatory environment mitigates these risks, he acknowledged the significant challenges in unregulated markets.
“Regulation provides certainty and boundaries, which is why I advocate for fair and appropriate oversight globally.”
Outlook for Wonga South Africa
Wonga South Africa’s vision extends beyond its current operations, Van Aswegen says. “I see immense potential in expanding financial inclusion, particularly for the 40-50% of South Africans without access to formal credit. By addressing regulatory barriers and leveraging innovative solutions, Wonga aims to empower underserved communities.
“The journey to financial independence starts with a credit record. Fintech can bridge gaps and create opportunities. With a commitment to education, transparency and responsible lending, Wonga South Africa is poised to continue its transformative journey.
“As fintech continues to reshape the landscape, Wonga’s journey offers valuable lessons on innovation, responsibility and the power of customer-centric solutions.”
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