Mogo is a financial technology company driven by the fundamental belief that banking and consumer finance will ultimately become a completely digital experience.
“That is the future,” founder and CEO David Feller said.
With second quarter 2015 results showing loan originations up 137% and revenue increasing by 122% compared with the same period last year, they’ve fittingly put their money where their mouth is.
Feller banks on the idea that a technology and data-first financial company can not only provide superior service, such as opening an account with full identification verification in minutes, but a superior and more consumer-centric model of credit.
“Consumers are not only looking for convenience. They’re looking for a smarter solution, and one that makes it easy for them to be in control,” Feller said.
The company has just announced the finalization of an agreement with Fortress Credit on a new expandable revolving credit facility of up to $200 million, bringing their available loan capital up to $250 million. The new credit facility will be used to finance the continued expansion of Mogo’s consumer installment loans of up to $35,000.
These loans of up to $35,000, termed Mogo Liquid, have starting rates of 5.9 per cent, and are predominantly targeted at middle-income Canadians.
“One of the unique things about our solution is that we offer consumers across the full credit spectrum the opportunity to lower their cost of credit and get out of debt faster compared to their existing alternatives,” said Feller. “Credit cards make it very easy for most consumers to overspend and get into debt, and stay in debt for a very long period of time at a very high rate, and then outside of credit cards, there’s consumer finance and payday loans, which share a similar characteristic in that they generally make it hard for consumers to get out of debt in a reasonable time frame, at a reasonable cost.”
Feller said, “At Mogo we have effectively designed a solution so that regardless of your credit score, you will have the ability to borrow money from Mogo, and most importantly, most likely considerably lower you cost of credit versus what your existing alternatives are, given your current credit situation, and then importantly, give you a path to lower your rate through what we call the Level Up Program.”
The Level Up Program is designed to reward customers for good payments on their loans. After twelve months of good payment history, consumers can ‘Level Up’ to a lower rate than the ones they originally qualified for. The Mogo blog claims that over 66% of their customers have already Leveled Up to a better rate.
Feller said, “It’s adding gamification to personal lending. Every payment, every month, we proactively communicate to the customer ‘Here’s where you are with you load. Here’s how much money you’ve paid off. Here’s how long until you’re out of debt. Here’s where you are in the Level Up program. Every payment you make brings you further up on the Level Up program, and you can Level Up to lower rates, even if your traditional credit score doesn’t improve, your Mogo score continues to improve through the Level Up Program.”
The team at Mogo believes that commercial finance is ready for disruption, and that their competitive edge lay in the use of technology and data to both reduce operating costs and provide a more appealing financial solution to consumers.
“We very much look at banking as if this is a Blockbuster-Netflix. The banks today have over 6000 branches in Canada. One of the main banks’ branches is over 20,000 square feet. The cost of that one branch alone would cover more than the entire overhead of Mogo,” Feller said.
He continued, “What we ultimately end up with is a very valuable experience and product offering for consumers that makes it a lot easier in the future for the next generation of consumers to actually stay in control of their financial health.”