Wonga Case Study: Making short-term loans transparent and convenient

  • OVERVIEW
    • Catalyst
    • Summary
  • ANALYSIS
    • Wonga facilitates emergency borrowing with a transparent and open approach to lending
      • Key issues covered in this case study include:
    • Wonga empowers consumers by enabling them to tailor the amount and duration of a loan
      • Wonga's short-term loans serve a market segment excluded from traditional borrowing sources
      • Wonga aims to differentiate itself from other payday lenders with its commitment to lending responsibly
      • Wonga is involved in an initiative to provide interest-free loans to people in developing countries
      • By setting out the total repayable amount at the start of all applications, Wonga demonstrates a transparent approach to lending
      • The speed of Wonga's cash transfers make it a very convenient lender
      • The total value of the UK payday lending market has increased significantly in recent years
      • Wonga has criticized the finance industry as a whole and has committed to the principles it says enable it to bring a fresh approach to the market
      • Wonga offers further convenience via its pay my bills facility
      • The innovative approach adopted by Wonga and its staff has been formally recognized
      • Wonga may increase the "trust rating" of responsible customers and lend them larger amounts of cash
      • Wonga runs extensive advertising campaigns to build and sustain its brand
      • Wonga also has a significant online presence, making use of both YouTube and Facebook
    • Wonga's loans draw heavily on the Convenience and Individualism Megatrends
      • An automated lending process increases convenience
      • Wonga is empowering its customers by putting them in control of their financial arrangements
      • Consumers are coming to expect transparency from all of the companies that they deal with
      • Removing complexity and focusing on simplicity engenders trust from consumers
    • Financial services providers should recognize the demand among customers for transparency and simplicity
      • The simplicity of Wonga's service is easy to overlook but has played a crucial role in its success
      • Consumers may be willing to pay a premium for convenience and good service
      • Building a brand is essential to the success of new entrants across all financial services industries
      • Wonga has differentiated itself from other providers by being vocal on its commitment to lend responsibly
      • Ultimately, Wonga has achieved success by targeting its service at a particular market segment
  • APPENDIX
    • Definitions
      • The Datamonitor Financial Services Consumer Insight Megatrend Framework
      • Authenticity
      • Comfort
      • Connectivity
      • Convenience
      • Individualism
      • Wellbeing
      • Demographic Complexity
      • Financial Intelligence Complexity
      • Lifestage Complexity
      • Wealth Complexity
    • Methodology
    • Secondary sources
    • Further reading
    • Ask the analyst
    • Disclaimer
  • FIGURES
    • Figure: Wonga enables customers to set the exact terms of their loans
    • Figure: The pay my bills service offers further convenience to time-pressed consumers
    • Figure: As part of its commitment to responsible lending Wonga carries out credit checks, something not all of the companies operating in this market have in place
    • Figure: Blackpool is one of the football teams Wonga has a shirt sponsorship deal in place with for the 2011–12 season
    • Figure: Wonga's Easter Egg Hunt was recently launched on Facebook
    • Figure: Wonga draws upon its empowerment of consumers in its advertisements

Brief

Published by
Datamonitor
Published on
30 Apr 2012
Product code
CM00205-006
Pages
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