Young Canadians Demand More Choice from Financial Institutions: Survey Results

Canadians aged 18-35 years are responsible with their finances and want faster, online access to capital

TORONTO, Dec. 3, 2013 /CNW/ - A new survey by Wonga Canada reveals that young Canadians (aged 18-35 years old) - many of whom interact, engage, and live online - expect their financial and borrowing institutions to transform how services are delivered to them. Speed, transparency, online and mobile access are some of the expectations held among young Canadians, according to the first survey of its kind conducted by BrandSpark International.

"This is a generation that lives life on-line and on their terms," said Mark Ruddock, CEO of Wonga Canada. "Technology is transforming the way they expect to access financial resources and the way they want to engage with their financial institutions."

According to the survey, this generation places an extremely high priority on getting and staying out of debt (87%) but the vast majority believes that most borrowing agencies and financial institutions aren't really trying to help them do so. Seventy-nine per cent say that lenders want them to pay as much interest as possible, for as long as possible. They also believe there are many hidden costs associated with borrowing.

"Young people don't want rigid one-size-fits-all products. The generation that buys individual songs and not whole albums expects greater choice and flexibility in their financial products too." continued Ruddock, "They also expect lenders to be open and transparent about the true costs of borrowing, while providing access to their cash more quickly through various on-line channels, including their smartphone. This is a wake-up call to institutions that haven't yet changed the way they operate." Survey respondents also said that while large unexpected expenses are of concern (82%), over half (56%) did not find the total cost of taking a short-term loan transparent and clear. "People want fairness and transparency from lenders" said Mr. Ruddock "They also want control over how much they borrow (down to the dollar), and for how long they want to borrow for (down to the day)."

"At Wonga, we're trying to live up to these expectations. Rather than charging a fixed fee for short-term loans, we only charge the customer for the days they have the cash, and we let them choose exactly how long they want the money for, from 1 - 45 days." said Ruddock, "For example, a few days ago a customer took out a $400 loan on a Saturday, he had the money in his account within one hour and he paid it back the following Friday; the total cost of the loan was $17, a fraction of the cost of a typical short term loan which charges a fixed fee of $21 per $100 borrowed (or a total of $84 in this case) regardless of how long the customer needs the money. Canadians deserve access to this type of low cost flexible loan."

Two thirds of those surveyed also said their ideal process for securing a loan was not available to them. In fact, the most common plan young Canadians have for dealing with unexpected expenses is to turn to family or friends for the money - the top option for almost one-half of respondents. Another one of Wonga's customers couldn't believe how simple it was to access emergency funds when his car broke down and he was unable to get to work. "He was at the auto repair shop, looking at a quote to fix his car that he knew he couldn't cover" explained Ruddock "So he took out his tablet, logged onto the Wonga website, filled out the application and showed the instant approval to the mechanic who began the repairs confident that the money was on its way."

The trend in financial responsibility also translates over to pay day loan users. Of those surveyed, 12 per cent of young Canadians indicate they have taken a loan from a pay day loan company before, while 8 per cent indicated have done so within the last year. Of these individuals, 82 per cent have taken a loan three times or less, 68 per cent two times or fewer, while 43 per cent had taken a loan once in the past year. Nearly all pay day loan users (82%) reported they were able to pay back the loan within a month, and over one-third within a week.

"The reality of life is that sudden unexpected expenses are likely to arise," said Ruddock. "Our survey results reveal that within the past year, more than one-half of young Canadians mentioned having had at least one unexpected large expense that they had difficulty paying. Car/home repairs and health/medical expenses account for one-half of these unexpected expenses, with car repairs being the most prevalent."

About this Research

This report is based on an online survey conducted by BrandSpark International, a leading brand, marketing and product innovation research company. Survey responses were collected from 1,003 young Canadians (outside of Quebec) aged 18-35 years, with the sample reflective of the general population in terms of age distribution, gender, and geography. The survey was conducted between March 28 and April 5, 2013.

About Wonga Canada Inc.

Wonga Canada Inc. is a ground-breaking digital finance company founded in the UK and headquartered in Toronto, Ontario. Since 2011, we have been transforming the Canadian credit market by offering small, short-term online loans for consumers.

Our mission at Wonga Canada is to solve people's occasional short-term and urgent cash flow problems with an equally short-term and responsible lending solution. We remove the complexity and inflexibility consumers face whenever they need to borrow cash in a hurry and offer greater speed, convenience and flexibility than any other financial institution or borrower. We are committed to responsible lending and use our fully automated and real-time risk technology, which processes thousands of pieces of data to make instant and objective lending decisions in seconds, 24/7. Our technology also means we can offer unrivalled speed, convenience and control to our customers.

Wonga Canada is part of the Wonga family of companies, which currently serves consumers and businesses across the UK and South Africa.

SOURCE: Wonga Canada Inc.

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