Wonga South Africa’s fintech innovation helping to revive financial confidence

Innovation in technology is growing faster 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 for fintech Wonga South Africa’s success over the past 13 years. Brett van Aswegen, CEO of Wonga South Africa, says 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. “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 South Africa began trading in 2012, as a branch of the UK-based global Wonga Group that 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.

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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 provision 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.” 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.

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