While South Africa may not get to experience all new trends emerging internationally, there are a few that consumers should look out for this year. 2015 is already being seen as the year of digital finance and spending. With a rise in smart devices and online services, now more than ever, it is becoming easier and more convenient for consumers to transact online.
Consumers should look out for the following top five finance trends in 2015:
With the introduction of several new point-of-sale payment systems, such as Standard Bank's SnapScan mobile app and the launch of Apple Pay in the United States, it is becoming easier and a lot quicker for consumers to pay for purchases when shopping.
Mobile payment systems are fast becoming the preferred method of payment, as has been seen with the rapid rise of brands such as Uber. Consumers look for convenience and businesses have become quick to capitalise on this in order to retain and grow their customer base.
However, consumers are cautioned not to spend impulsively. While these new payment systems may be more convenient, it also makes it easier for someone to overspend.
According to a survey conducted by Rackspace, one-fifth of the respondents indicated that mobile devices have increased their impulse purchases, with 71% of this group highlighting that the main reason for the increase in spending was due to the simplicity and ease of use of the technology.
With the introduction of several online shopping sites over the past few years and improved online security measures, South Africans are becoming more adept to online shopping.
Consumers are realising that the convenience and benefits of online shopping can save them both time and money.
South Africans may opt for online shopping as a way to avoid long queues, or to take advantage of special online deals and the offer of free delivery from certain e-tailers. It is vital however, that consumers adopt safe online shopping practices and avoid any impulse spending that could lead to unnecessary debt.
With decreasing global oil* and food** prices, consumers can expect to have more money left in their pockets this year. With the massive rise in the cost of living over the past few years, however, consumers are spending less and putting more money away in savings and investment accounts.
Consumers should avoid spending any extra income and instead put the money away in a separate savings account for unexpected expenses. In a 2014 Wonga survey with over 20,000 of its customers, only 31% of the respondents indicated that they have a separate savings account for an emergency expense. Many financial experts recommend that consumers have at least three months' worth of income in an emergency fund.
Following the Great Recession in 2008***, global and local markets became constrained and ultimately caused a reduction in consumer spending. Over the past year, however, long-term investments in the property market have seen a rise - particularly among first-time homeowners.
With rising rental costs, particularly within urban areas and metropoles, consumers are either choosing to continue to rent their existing properties or make the move to invest in their first homes.
Based on purchasing trends in 2014, South African bond originator Ooba highlighted in a 2014 report that first-time homeowners had driven the home loan market over the past year - with an average of 52% of all new home loans being for first-time buyers.
Combatting online fraud and financial scams is an ongoing battle that financial institutions and e-commerce sites will continue to focus on in 2015. This will mean that new security measures and payment authentications will be put in place to protect consumers' personal information.
2015 will see a rise in new authentication systems, including biometrics such as fingerprint scanning, as a way to prevent cyber-criminals accessing any sensitive data. With smarter technology and increased connectivity between devices (known as the Internet of Things [IoT]), greater security measures will be required to avoid hacking and malware.
While companies will work hard to introduce new data encryption solutions, consumers need to remain vigilant against software hacking, fraudulent emails (commonly known as phishing) and mobile malwares that could be used to retrieve personal data off smart devices.
In 2015, consumers can expect a number of changes and improvements to the way spending and purchasing of goods will take place. While these improvements will make it easier it safer and easier for people to spend, it is incredibly important that this is done responsibly.
Sources:
* www.nasdaq.com/markets/crude-oil.aspx
** www.fao.org/worldfoodsituation/foodpricesindex/en/
*** en.wikipedia.org/wiki/Great_Recession
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