The business, which has been heavily criticised for lending money at interest rates of more than 4,000pc, started out offering short-term loans to consumers and added business loans earlier this year. However, Errol Damelin, Wonga ’s chief executive, said these are the first steps in a much larger plan.
“You will absolutely see Wonga in areas where the traditional financial services players don’t deliver good value. We’ll do other stuff like payments and savings. We’ll probably do mortgages at some point. The mortgage market’s broken in the UK. It’s inefficiently priced,” he said.
“For Wonga, the first product was only ever the first product. It’s like looking at Amazon as a book company in 1999. They never built that tech or those warehouses just to do books. That was a very consciously chosen product to prove that the distribution was good and that the brand worked online. The most insightful way of looking at Wonga would be to look at it the same way.”
In the payments market, Wonga wants to take on Western Union, the money transfer business which made $271.2m in the second quarter from customers instantly sending money overseas. “Talk about immoral - to take £20 from somebody sending their own money to a relative where there is almost no risk,” Mr Damelin said.
He added that he was “impatient” to get the services off the ground but it could take two to three years. “It’s like Amazon. Amazon has been going since 1994. It’s only in [nine] countries now. To build something very special takes a while.”
His condemnation of Western Union is likely to raise eyebrows amongst MPs (BSE: MPSLTD.BO - news) , including shadow business secretary Chuka Umunna and Stella Creasy, Labour MP for Walthamstow, who have previously dubbed Wonga a “legal loan shark”. The company, which makes its loan calculations based on a sophisticated algorithm, has also been rapped by the Office of Fair Trading for its aggressive pursuit of those customers that default .
However, Mr Damelin insisted that Wonga is “the good guy” for enabling easier access to credit. “Banks are ripping people off with overdraft late fees. This is creating a genuine alternative to that...There isn’t a bank on earth that has customer service ratings like ours,” he said.
So far, the company, which was founded in 2008, has made more than 5m loans. The cost of securing and vetting a new customer means that, typically, it only makes a profit on those customers who repay their first Wonga loan and come back for more.
In June The Sunday Telegraph reported that the UK firm is eyeing a £1.48bn flotation on either Nasdaq (Nasdaq: ^NDX - news) or the New York Stock Exchange. Sources said Wonga was looking at its strategic options and was eyeing an initial public offering in 2013 if market conditions allowed.
The company is backed by a catalogue of heavyweight private equity firms including Balderton Capital, known for its investments in LoveFilm and Betfair, and Greylock Partners, one of the founding investors in LinkedIn.
Western Union could not be reached for comment.