South Africa is experiencing an online evolution as many more of its population find themselves using online offerings for an increased number of daily things like shopping online and internet banking. This has been facilitated by the adoption of smart phones and tablets. As the shift to digital occurs this is good news for many sectors including the fintech industry with businesses like payday loans and search engine comparisons smartening up their act and turning their attention to their online platforms.
In many countries this shift online has meant the closure of many small shops – for example in the UK in the past 2 years the number of payday loan shops has decreased from 1,400 in 2013 to just 500 today with many more predicted to close. People are time poor and prefer to complete as many actions as possible from their phone – in fact if they can’t do it online they probably won’t do it choosing something instead that they can do online. Not only do people not have the time but there seems to be far less of a desire to visit or be seen in this type of outfit. Businesses really have to adapt to this increasing need or they face the risk of extinction.
Cash loans provider Wonga are in the fortunate position that they have realised the hard way and are now re-inventing themselves with a much cheaper proposition and a great online, intuitive website. They have a site that offers the user great functionality and states exactly what the borrower is getting themselves into from warnings about repaying the loan to a great slider function showing them how much they will repay in total. They offer a comprehensive, downloadable free guide to borrowing as well.
It is no secret that payday loans have been through the publicity mill and that new regulations have forced many companies out of the market place and there are bleak predictions from experts about the future of the industry but the facts speak for themselves. There will always be a demand for this type of lending – the industry worldwide is worth a massive R400 billion. There will always be a need for short term cash as people receive unexpected bills that they haven’t budgeted for. Credit in recent years has been much harder to be approved for and whilst still requiring credit checks these short term, higher interest loans are much easier to come by than high street loans or credit cards. So whilst the sector weathers the storm who will be the winners? It will clearly be those that offer a clear and honest offering and a functional and intuitive application process. Investing their time and efforts online is clearly the way forward.