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Africa Outlook

Bridge

BRIDGE

A David & Goliath Story



Bridge's core business is retail unsecured lending. The company was established in 1994 in order to provide all South Africans with the right of access to credit.

Writer Rebecca Wigmore
Project manager Sheridan Halls

When talking about the future of Bridge, its Chief Growth Officer Neels Grobler is buoyant: "There's only one way and that's upwards." His optimism may prove to be well-founded. The company has a footprint of over 120 Bridge Loans branches in South Africa where its core business is retail unsecured lending to the growing South African middle class. A general overall upturn in the country's economy and an unprecedented investment in current infrastructure have allowed Bridge to provide the South African market with up to R150 million worth of unsecure credit per month. As Grobler explains, "We do not lend to the corporate space currently.

We are absolute retail players."

Indeed, integral to Bridge's success is its "focus on small, short-term unsecured credit," that runs around six months on average.

Bridge is also committed to technological innovation.

"We are a technology-driven company. Our whole credit risk scoring mechanism makes sure we give correct credit of the correct amount to the correct people. All these decisions are driven through technology," Grobler says. And the firm is steered by a dynamic executive team consisting of CEO, Emile Aldum, Clifford Coombe (Chief Legal Risk & Compliance Officer), Conrad Erasmus (Chief Operating Officer), Chief Financial Officer Michael de Klerk and of course, Grobler himself.

Despite a sense of general optimism, the world of unsecured finance is not without its difficulties. Bridge is very much a company that wants to prove itself in the marketplace.

"The micro lending industry certainly also has its challenges when it comes to securing adequate capital investment for our industry," Grobler admits. "During the past year the unsecured credit industry underwent great challenges. Bigger players in the unsecured credit space were starting to experience a much high level of impaired loans than usual. However, what distances us from them is that we are a legitimate sizable niche player in this highly regulated environment who can react and scale quickly to economic changes and industry challenges. For us it's absolutely imperative to be ethical and a responsible provider of retail unsecured credit to the market."

Bridge's ability to work outside of traditional lending scenarios is one of the reasons that its future looks so bright. Its financial strategies are nimble and reliable when it comes to making a return.

"We're different to the bigger banking scenarios in the sense that we provide short-term loans in smaller amounts – our average loan currently paid out is in the vicinity of R2,800 whereas larger credit providers are in the R30,000 to R40,000 ranges, and this sort of loan is offered over a much longer period. Our exposure is small and we recoup the capital quickly," Grobler says.
Funding unsecured loans also has its own challenges hence Bridge is implementing a long-term capital provision strategy. This will entail both a debt and equity funding model in order to boost its growth in the unsecured credit market and tap the market potential by offering various above average return financial products to potential investors.

One such example is the Bridge Savings Bond. Bridge will make retail saving bonds directly accessible even to lower income customers through cutting out the middle man, i.e. corporate financial institutions.

Historically, South Africa has not had a strong culture of savings, but by offering bonds at an inaugural R50,000 and then dropping the price to as low as a R1,000 minimum, Bridge is making a real attempt to provide a way for its loan clients to also become investors. This isn't the only way in which Bridge is committed to "giving back" to its customers. With its regular support for causes that include School Project Programmes, community sport team sponsorship and regular hamper donations to the Orphanage Association, Bridge has a strong drive of community engagement. The company is also committed to providing education regarding fiscal responsibility and making sound financial decisions through its Financial Literacy Programmes.

It isn't only Bridge's customers that receive positive treatment. Bridge has just under 700 employees, most of whom work in the 120+ branches across South Africa.

According to Grobler, "Employees want to work for a dynamic company and that all comes down to branding. The Bridge brand has been in existence for many years. We are optimistic about growing an even more positive brand identity in the coming years".

Bridge has certainly worked hard to make sure this is the case, engaging the services of King James (one of South Africa's top marketing and advertising agencies) and working with design firm Jam Factory to produce its distinctive corporate identity. Recently, the very famous Faction Media House has signed a strategic partnership with Bridge to enhance, execute and further strengthen its marketing strategies and plans.

But it's really the challenges of the business that have made Bridge such a stimulating place to work.

"Because we are so technology driven, there are a lot of people who want to be part of that excitement and journey. We do things in a different way," Grobler says. "We provide a certain amount of capital for training at all levels in our business. We want staff to be up-skilled and to create a strong entrepreneurial spirit within the company. People contribute [to Bridge] as much as we contribute to them. In addition to the training programme, we have developed a platform called the "Innovation Circle" which allows staff members a space to offer innovative ideas and spearhead plans for improving efficiency, reducing costs and pursuing operational excellence. This scheme is buoyed by financial rewards for the best ideas and allows every member of the workforce a chance to make a positive difference to the company."

Bridge is consistently looking to the future and ways to expand its services and product offering. Among others is an ambition to secure a banking licence within the foreseeable future. There are also exciting plans for growth. Currently Bridge has a one percent market share of the South African unsecure credit market. Hence, it is a company that seems bound for greater success.

"We are geared to grow our market share three or fourfold over the next four to five years." Grobler concludes. "We're on a marketing drive to secure external funds and once we have there's absolutely no limit to where we can go. We've built a cutting edge technology driven engine that's capable of so much more."

To learn more visit www.bridge.co.za.