South Africa may not be at the forefront of digital technology and have only recently been in the news for failing to achieve their digital broadcasting migration target. Having said this there is an increase in digital migration as the country experiences a surge in digital usage. With the adoption of smart phones and tablets growing among the population of South Africans more companies are now able to migrate their services online with much more sophisticated websites. This spells good news for South Africa’s fintech industry with the more advanced companies at the forefront of capturing the benefits of this growth. One such industry is the payday loan sector and as high street payday loan shops are being closed down it has forced a move of many firms to offer an online alternative.
This shift to digital allows for a much slicker online user experience and many websites offer a mobile version or app, for smartphone and tablet, that allow the user to select the amount they want to borrow whilst being able to see how the interest rates change as differing amounts are borrowed. Simply by moving a slider across the screen you can increase the amount you want to lend as it shows you the interest rates that this will attract.
As well as being more intuitive with user friendly layouts and functionality, these websites also give the would be borrower clear warnings about the importance of being able to repay what is borrowed in full and on time with clear and accessible terms and conditions. It is undisputable that the industry has had some negative press about the interest rates that they charge and about the difficulties that people who borrow experience. Despite this bad press and the increased regulations that the industry has recently undergone it is still worth R400 billion worldwide and a service that is still very much in high demand. It is necessary for the companies that operate in this marketplace to ensure that their services are not prohibitive and that they aren’t going to leave their lenders in a spiral of unmanageable debt. There are many well established names out there including Wonga, who have recently launched into the South African marketplace. They offer a clear and easy to use website and carry clear warnings on their website about the expectations on the borrower of repaying the full amount by the deadline and in full.
We will no doubt see not only a surge in online lenders in the near future but also other fintech start ups entering the marketplace in other areas. The South African search engine market is not anywhere near as sophisticated of that of Europe and the US and we are currently seeing the emergence of start ups in this arena with many more to follow suit.