Telling the truth about SME life today

Money machine: Errol Damelin, Wonga

But Damelin didn?t want to build another enterprise software business (the sales cycle is between 12 and 18 months that frustrated me ), so he spent a year travelling, looking for ideas for a new venture. He became captivated with payday lending companies. He could see there was a clear demand for short-term loans to tide people over or take care of emergencies (UK consumers take out more than ?60bn in unsecured personal loans each year), but the industry was seen as predatory and exploitative.

Banks. Payday lenders. Credit-card companies. Doorstep lenders. The whole group of players across consumer finance had completely forgotten about the customer and had given the sector a bad name,” he says. Even though Damelin had absolutely no experience in the short-term loans market, he spotted an opportunity to use technology to unsettle an old industry. After the relatively ‘safe world of the cable and wire industry, it was a brave move. It’s a controversial sector and I?m okay with that,” he says. A lot of the great entrepreneurial businesses have been built in controversial spaces. Just look at Betfair, PayPal, Google, Skype, Spotify and Facebook.

Damelin hooked up with Jonty Hurwitz, former founder of financial reporting platform Delve, and they brainstormed how they could create an automated, real-time processing system that would ?leave traditional lenders eating dust?.

The pair wanted to remove fallible human decisions from the lending process so they spent the best part of a year developing a technology platform that would use sophisticated ?behavioural algorithms” and a degree of artificial intelligence to crunch thousands of pieces of publicly available data to assess the credit-worthiness of a customer in less than a second.

They also wanted to put customers in control of the size, length and cost of their loan so they created a website where consumers could choose how much money they want (up to £400 initially, rising to £1,000 for later loans) and could vary the period over which they repay between one and 41 days thereby determining the cost.

Read more on page three

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