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Johannesburg – Nearly 13 million South Africans are showing signs of financial insecurity and nearly five-million are over-indebted.
With this in mind, it is no surprise that the concept of saving is still fairly foreign, although savings are increasing.
This is some of the findings of the 11th annual FinScope SA consumer survey just released.
The survey, developed by FinMark Trust and conducted in partnership with TNS research surveys, provides insight into trends in the financial sector and in particular levels of adult financial access.
TNS’s Rob Powell commented that there has been an increase in those who are formally served financially, from 72% last year to 79% in 2013.
However, the trend remains for respondents to overlap and use a combination of formal and informal financial services and products.
Moving on to look at Living Standards Measures (LSM) groups, Powell says an increase in access to services such as water and electricity have meant a greater desire for appliances in the home and a resulting shrinkage of LSMs 1 and 2 and growth of LSMs 7 to 10.
In addition, the number of people earning between R3 000 and R8 000 per month is increasing.
Lack of services
Powell says this is an important consideration because it is likely that such people’s needs are changing in terms of the financial services they require.
Those who remain without services and within the lower LSM groups are most often in remote, hard-to-reach areas such as rural parts of Mpumalanga, Limpopo, the Eastern Cape and KwaZulu-Natal and their lack of services largely correlates with lack of access to financial services, too.
On credit, the FinScope survey found that more people, especially in the R3 000 to about R8 000 income bracket, are using credit or taking out loans in an increased engagement with formal financial services, especially in terms of secured and unsecured loans.
The lower income brackets still engage in informal borrowing, although in general this is declining.
The survey shows that 13% of respondents saved through a bank this year, with overall bank savings growing from R3.9m to R4.7m.
However, the majority of saving continues to be done in informal ways, such as between neighbours or in stokvels, because many people receive a variable income, which means they need to access their savings easily.
Mobile banking
Moving away from the traditional, Powell examined some of the survey’s findings with regard to mobile banking in South Africa.
About 90% of adults in South Africa claim to use cellphones, equating to 33 million. That said, while mobile banking has increased, 71% still do not use it, mainly due to lack of penetration in rural areas.
Powell says the suggestion is for financial institutions to look at alternative ways of making mobile banking appealing to a wider range of the population – USSD protocol is a good example of ensuring that simpler devices are also able to make use of mobile services offered.
However, mobile connectivity aside, says Powell, it’s encouraging that 3.5 million more South African adults are banking this year, with 1.9 million being South African Social Security Agency (Sassa) card holders and 1.5 million being new banking entrants.
Across the board the findings from this year’s FinScope survey show that while there are improvements when it comes to access to and usage of financial products and services, there is also significant room for further development.
Powell believes that the aim going forward should be to work on including the excluded. The challenge is to capitalise on what is already working and improve on what is not.
With this in mind, it is no surprise that the concept of saving is still fairly foreign, although savings are increasing.
This is some of the findings of the 11th annual FinScope SA consumer survey just released.
The survey, developed by FinMark Trust and conducted in partnership with TNS research surveys, provides insight into trends in the financial sector and in particular levels of adult financial access.
TNS’s Rob Powell commented that there has been an increase in those who are formally served financially, from 72% last year to 79% in 2013.
However, the trend remains for respondents to overlap and use a combination of formal and informal financial services and products.
Moving on to look at Living Standards Measures (LSM) groups, Powell says an increase in access to services such as water and electricity have meant a greater desire for appliances in the home and a resulting shrinkage of LSMs 1 and 2 and growth of LSMs 7 to 10.
In addition, the number of people earning between R3 000 and R8 000 per month is increasing.
Lack of services
Powell says this is an important consideration because it is likely that such people’s needs are changing in terms of the financial services they require.
Those who remain without services and within the lower LSM groups are most often in remote, hard-to-reach areas such as rural parts of Mpumalanga, Limpopo, the Eastern Cape and KwaZulu-Natal and their lack of services largely correlates with lack of access to financial services, too.
On credit, the FinScope survey found that more people, especially in the R3 000 to about R8 000 income bracket, are using credit or taking out loans in an increased engagement with formal financial services, especially in terms of secured and unsecured loans.
The lower income brackets still engage in informal borrowing, although in general this is declining.
The survey shows that 13% of respondents saved through a bank this year, with overall bank savings growing from R3.9m to R4.7m.
However, the majority of saving continues to be done in informal ways, such as between neighbours or in stokvels, because many people receive a variable income, which means they need to access their savings easily.
Mobile banking
Moving away from the traditional, Powell examined some of the survey’s findings with regard to mobile banking in South Africa.
About 90% of adults in South Africa claim to use cellphones, equating to 33 million. That said, while mobile banking has increased, 71% still do not use it, mainly due to lack of penetration in rural areas.
Powell says the suggestion is for financial institutions to look at alternative ways of making mobile banking appealing to a wider range of the population – USSD protocol is a good example of ensuring that simpler devices are also able to make use of mobile services offered.
However, mobile connectivity aside, says Powell, it’s encouraging that 3.5 million more South African adults are banking this year, with 1.9 million being South African Social Security Agency (Sassa) card holders and 1.5 million being new banking entrants.
Across the board the findings from this year’s FinScope survey show that while there are improvements when it comes to access to and usage of financial products and services, there is also significant room for further development.
Powell believes that the aim going forward should be to work on including the excluded. The challenge is to capitalise on what is already working and improve on what is not.
