Kathy Gibson reports – As the Covid-19 pandemic hit South African shores, there was an almost immediate drop in consumers’ earning and a rise in retrenchments.

That has only increased since April, says Mutsa Chironga, divisional executive for consumer banking at Nedbank. “So there is a lot of income hardship in the country.”

A lack of cash reserves and lower card usage has also been very apparent, Chironga says.

“Card usage had been growing consistently over the last few years. In 2020 it continued the same growth pattern until March – but it dropped to about half in April.”

There was a slight improvement in May, and then better figures in June, Chironga adds.

Consumers have reduced their spending and have been actively managing their money during the lockdown period, he adds. There has been more short-term saving, less unsecured credit and a recovery in home and car loans.

“There was a big initial drop in unsecured and secured lending. But the drop in interest rates has seen the home loan market come back strongly in June and July.”

Some of the insurance products have experienced robust demand, Chironga says.

A big theme that has become clear is the shift to digital, in both digital sales and digital usage.

The number of Nedbank’s digitally active customers is up about 9% since the beginning of the year, which maps overall market behaviour.

The number of customers into branches dropped to half in April, despite banking being an essential service.

This has recovered somewhat since April, but Chironga believes we have seen a permanent behaviour change from physical to virtual channels.

Nedbank has launched a number of new services on top of its existing digital channels, from debt relief to loans and more, he adds.

In fact, the bank launched a new app during lockdown. Avo offers access to multiple services including healthcare, shopping and home entertainment.

Tap on Phone allows customers to accept payments on their mobile devices without physical contact, the need for point of sale or cash handling.

Amy Underwood, a senior behavioural economic at Nedbank, says there are several drivers to the change in money habits.

“Habits are there to make our lives easier; it’s our brains taking repetitive tasks and automating them.

“However, what can go wrong is when habits and our goals conflict. The core of habits is identical – be they good habits or bad habits.”

Habits are really powerful and, once formed, they are hard to break, Underwood says.

However, times of stress are a good time to change habits.

For instance, Underwood says, people may have been handling their money in the same way for years without really thinking about why they are doing things in a certain way.

During Covid-19, people’s awareness is more heightened and they are more receptive to new ways of doing things.

This can apply to the way people handle their money, as well as how they spend.

Many of the triggers that drive over-spending disappeared during the lockdown

The rapid shifts in South African’s money habits shows how powerful habits are, and how a powerful time of change can reset our money habits.

Underwood believes people will retain habits that make their lives easier and more convenient.

In addition, where the main barrier was learning how to do something, that has now been overcome so those habits are likely to stick.

“In shifting our money habits, the trick is to set up things that are easier, with the triggers that allow us to keep to them,” Underwood says.