Survey Shows Consumers Upbeat and Cautious about Financial Prospects

While nearly 4 in 10 (37 percent) saw an upswing in their income during the past quarter, and more than 7 in 10 (75 percent) expect their incomes to increase in the coming year, 1 in four (25 percent) saw their incomes decline and more than a third (34 percent) worry about meeting their financial obligations. According to the TransUnion Consumer Pulse Study for Q2 2023, the major drivers for increases in income included starting a new business (22 percent), increased salary (20 percent), or finding a new job (14 percent).

Job losses

Conversely, job loss (20 percent) was the primary cause of decreased incomes, highlighting the significance of employment stability for households’ financial well-being.

As a result, many families made budget adjustments in the past quarter, including cutting back on discretionary spending (63 percent), cancelling subscriptions or memberships (35 percent), and reducing digital service expenses (27 percent). This cautious outlook on expenditures suggests that consumers are prioritising financial responsibility, indicating a noteworthy shift in spending habits, says Weihan Sun, Director of Research and Consulting at TransUnion Africa.

Tactics

To meet their financial obligations, consumers are employing a range of tactics. Overall, 41 percent plan to make partial payments, 28 percent will dip into their savings and 24 percent will look to borrow money from friends or family members.

And while 38 percent anticipate increased bills and loans and 53 percent expected a continued decline in discretionary spending, nearly a third (32 percent) expected to reduce large purchases such as appliances and vehicles. Nearly all consumers (94 percent) believe access to credit is crucial. However, around 2 in 3 (65 percent) believe they lack adequate access to credit and lending products.

Younger generations

Younger generations are especially concerned: 73 percent of Gen Z (born 1995–2004) and 62 percent of Millennials (born 1980–1994) were unsatisfied with their credit access.

One in 3 consumers plans to acquire new credit or refinance existing credit. In all, 44 percent of Gen X (born 1965–1979) respondents plan to apply for new credit products within the next year. Overall, 27 percent of respondents plan to apply for a personal loan, 22 percent a new mortgage, and 21 percent a credit card. Four in 10 (41 percent) of respondents considered applying for credit but ultimately abandoned their plans, either finding an alternative source (26 percent) or feeling the cost of new credit or refinancing was too high (24 percent).

Credit monitoring

Most consumers (94 percent) acknowledge the significance of credit monitoring, but less than half of consumers (43 percent) regularly check their monthly credit reports. However, Sun says it is “concerning” that 32 percent of consumers do not monitor their credit reports. This highlights the need for more education and tools to support regular credit monitoring.

Almost half (46 percent) of respondents believed their credit scores would increase if businesses incorporated non-standard information into their assessments, such as rental payments, gym membership payments, short-term loan history, and buy now, pay later (BNPL) services. Half of respondents conduct at least 25 percent of their transactions online, with Gen Z leading this trend, but Gen X and Millennials (at 58 percent and 50 percent, respectively) are also conducting significant numbers of online transactions.

Identity risks

Digital fraud attempts remain a pressing issue, with 64 percent of those surveyed being targeted by such schemes over the past three months, and 8 percent were targeted and fell prey to these schemes.

The most common types of fraud schemes included money or gift card scams (51 percent), vishing (fraudulent phone calls to trick consumers into revealing their data, 38 percent) and phishing (fraudulent emails, websites or social media posts designed to steal data, 35 percent). As a result, consumers are concerned about the security of their personal information, with 94 percent expressing concern about divulging their details. Eight in 10 (80 percent) are worried about identity theft, and nearly the same number (77 percent) worry about invasions of their privacy.

Trust and cybersecurity

The data highlights the crucial importance of trust and robust cybersecurity measures in financial transactions and interactions. “Overall, it’s clear that consumers are increasingly aware of the risks associated with digital fraud,” said Sun. “With rampant scams, consumers are cautious about sharing personal information, fearing privacy invasion and identity theft. This indicates a significant need for stronger security measures and robust fraud prevention strategies in the digital space.”