The Anonymous Widower

Robert Peston On Wonga

Everybody and especially politicians of a certain colour, love to hate Wonga.  I have little time for them, every since I saw a presentation by one of their founders at an Internet awards ceremony.

But Robert Peston in this article on the BBC web site, asks whether we look at Wonga through the wrong set of glasses. This is the first two paragraphs.

In many ways Wonga.com is an impressive, even admirable business (and please resist your temptation to send me hate mail – I am feeling delicate).

It is, for example, funded exclusively with equity capital, or £100m genuinely at risk of being lost if things go wrong.

The article also says that as it takes no deposits, it can’t suffer a run and be bankrupted, as effectively happened to Northern Rock.  And will probably happen to other banks in the near future.

Remember, I used to part-own a finance company and did a lot of analysis of the dynamics of the loan business.  Hence my admiration for the Zopa model, which I think is very stable.  I said that here in a lot of detail.

Obviously, Wonga did a lot of analysis on their data and this has led them to their success, as they have the right model and technology. Peston says Wonga’s technology is world class.  If banks such as RBS, Northern Rock and Bradford and Bingley had had world-class technology, they might not have gone bust.

Most of the comments on the article, seem to say Wonga and their ilk should be banned.

But you’re going for an easy target, that plays well in the media.

The real problem with Wonga, is the appalling level of financial education in this country, which means that people succumb to the charms of the likes of Wonga.

If people knew how to manage their money better, there’d be no need for Wonga. But that doesn’t happen to people until they’ve had at least one financial crisis!

June 27, 2013 - Posted by AnonW | Business, Finance, World | Wonga