Consumer finance outsourcer develops South Africa’s first online-only revolving credit facility with Corticon

South Africa has realized tremendous economic growth over the past few years, motivating consumers to spend more and broadening opportunities for local businesses, especially where it relates to e-commerce. It was out of this landscape that mobicred was born: South Africa’s first online-only revolving credit facility. Customers can select mobicred as an online payment option, just like credit cards or PayPal. After a brief once-off online application process, customers are approved for a specific risk-based facility limit that they can use with any participating online merchant. Being a mass-market, retail based product, the mobicred option is particularly attractive in South Africa where approximately only 20-25% of consumers carry a bankcard, primarily as a result of banks tending to be more risk conservative. The other 75% have virtually no other means of purchasing online, other than opting for the onerous EFT payment option.

Recognizing the incredible market opportunity to provide an alternative payment solution, mobicred turned to Redwood, a Cape Town-based company specializing in consumer finance outsourcing, delivery and consultancy solutions for the South African, African and Middle Eastern markets.

“Competition in this area is fierce,” explains Peter Versfeld, Chief Information Officer for Redwood. “If it takes more than a couple of seconds to complete a transaction using mobicred, the consumer has other payment options they can select. For that reason, mobicred was designed to be a lightning-fast, ecommerce aligned, real-time solution.”

Building mobicred from the ground up, the company’s standards for performance, integration and responsiveness were extremely high. Criteria for a new system included: Fast turnaround for on-line applications , easy integration to third-party data sources , real-time application assessment and credit granting , real-time purchase authorization „, ability to comply with South Africa’s complex regulation and legislation , fast customer service capability, and online access for customers to update their data. And Redwood needed all of this functionality delivered online and via web services – at a reasonable cost. 

Redwood evaluated a number of solutions to power mobicred. But the Integrated Lending Solution (ILS) from Progress Software partner MIP Holdings Pty Ltd. was the only system that provided all of the features and functionality Redwood needed in a single solution. ILS is a full-featured and comprehensive banking system, specifically focused on management of loans and revolving credit facilities. “ILS offered us a one-stop-shop solution and ticked off all of our boxes in terms of the credit and fraud risk management capability, compliance, business rules management, the database, the hosting service, ease of integration, and more. Finding everything we needed in a single solution would provide us with a faster time to market, at a lower cost. And we liked the idea of working with just one vendor under a single SLA. MIP was also a solid company with an excellent reputation, which instilled the confidence we needed to move forward,” explains Andrew Goodrich, Chief Executive Officer for Redwood.

ILS is powered by Progress Software technology. The Progress® OpenEdge® database securely retains all information on customers and is used in real-time to approve or decline online purchase transactions from multiple on-line retailers and sales web sites. A key component to ILS is the inclusion of the Progress Corticon Business Rule Management System as the decision engine to drive the process of approving or declining an application, and for those approved, to allocate a spending limit on the account. All of this activity has to happen in real-time while the online applicant waits for a decision. Thus, speed and flexibility of the rules-based process is paramount to completing the purchasing transaction.

“We were particularly attracted to Progress Corticon. It is very flexible and configurable, which is especially important from a consumer finance/credit perspective relative to effecting risk strategies. We realized that this agility would accelerate our time to market, improve our competitive advantage, reduce costs and ultimately increase revenues. For example, we launched mobicred in just four months – from proof of concept to deployment,” says Goodrich.

This faster time to market enabled Redwood to quickly provide mobicred with a state-of-the art solution that is a first of its kind. “In today’s competitive online retail world, it is essential to provide an applicant looking for credit with a response in as short a time as possible,” explains Goodrich. “While there are currently no direct opposition offerings to mobicred, creating a barrier to entry for any new player is seen as critical, as is retaining the market leading position.”

The flexibility of ILS with Progess Corticon also lends itself to keeping up with the rapid pace of change as well as evolving compliance regulations. “The ability to quickly modify or add rules is vital to keeping customers happy, especially in a start-up environment where you are constantly making changes,” says Versfeld. “Progress Corticon makes it easy for any savvy technical business user to implement changes without having to go through layers of development teams or support desks. Today, with Progress Corticon, we can modify a rule in almost real-time instead of the hours or days it would take if we were dependent on hard coding.”