Financial stress is clearly a problem for many South Africans. According to the NCR, less than half of those who are credit active are current on all their accounts.
Having a highly indebted economically active population has far reaching implications. According to the Sanlam Retirement Benchmark Survey for 2017, around 70% of the South African middle class are experiencing financial stress, largely attributable to excess debt. This, in turn, has a material impact on health, and on the ability of employees to focus and be productive at work. It also increases the risk of employees engaging in fraudulent activities. Other research highlights that highly indebted consumers are at risk of making extreme decisions such as cashing out their pension early to settle debts, or worse, quitting their job to get their pension. Such actions are damaging to both the employee and the employer.
To help address these problems, Eighty20 has developed an analytical module that helps employers investigate the financial wellness of their workforce. The Eighty20 Financial Wellness Diagnostic leverages our analytical capabilities and experience with credit bureau data together with advanced predictive analytics and data visualisation techniques to identify employees that are in, or at risk of, financial stress. It also allows employers to track behaviour change over time in response to financial wellness interventions. This, in turn, enables employers to implement effective financial wellness strategies or tailor existing programmes.
Eighty20’s development of this diagnostic is grounded on our extensive analysis of consumer credit market trends over several years. Our research has leveraged regulator and bureau data, as well as qualitative data to understand borrowers and explore lender motives. Because of our work in this field, we are acutely aware of the need for more targeted and effective financial wellness interventions.
Employers can play a pivotal role in shaping employees’ attitudes towards spending and saving. We are encouraged by the response we have received to date from some of South Africa’s major employers and look forward to engaging on this topic with more organisations.