Will there be a brighter outlook for 2019?

Prices always tend to go up when New Year strikes and there are a few things to be jittery about in 2019. But it’s not all negative.

Will there be a brighter outlook for 2019?We’re always told about the doom and gloom when it comes to our finances, but what many forget to focus on is the positive actions and trends that could affect our wallets for the better.

The elections are not far away and political uncertainty is always going to make people (and the markets) nervous. When it comes to money, there will always be unpredictability, but here’s what you could look forward to in 2019:

Technology will make things cheaper thanks to more competition

2019 will definitely see a shakeup in the banking sector in South Africa, with the establishment of Bank Zero, a digital-only bank backed by former FNB CEO Michael Jordaan, which promises to provide most services free of charge. Discovery also has plans to enter the banking sector this year.

More competition in banking is sorely needed because for too long, banks have gotten away with charging consumers for virtually every transaction, while banks in countries like the UK don’t charge for banking at ATMs as they make their money through credit facilities.

Jordaan says: “Fortunately quite a few things will become cheaper in 2019, like solar power generation costs which will continue to drop in line with the long-term trend. Bank fees will come down, driven by new entrants like Bank Zero, and mobile data costs will reduce also because of new entrants like Rain.”

Rain is a mobile data-only network operator and according to its chairman, Paul Harris, it’s due to launch a new 5G wireless network in 2019. Currently, Rain offers one plan – a 4G data-only serviced priced at 5c per MB (ie R50 per GB). It boasts that its customers are free from contracts, bundles and expiry. As its website proclaims: “You only pay for the data you use, at the end of the month. Simple.”

There could be more rewards

At a London event last month, Discovery Vitality’s CEO Adrian Gore promised that he will get 100 million people 20% more active by 2025. To incentivise its customers, and to reach this goal across South Africa, the UK, the USA and other areas where it operates, there are bound to be more rewards.

It will probably not be alone in using this technique. Bronwyn Williams, trend translator and future finance specialist for Flux Trends,  predicts that consumers can expect more punitive and rewards-based ‘behaviour modification’ products from insurers and banks. But she warns that consumers should be aware of the trade-offs related to perks or convenience versus data privacy and control.

Better growth in the economy

Stanlib chief economist Kevin Lings believes that while the first half of 2019 will remain challenging for consumers, they will start to feel some relief in the second half of the year. He is optimistic that inflation will start to moderate, and that economic growth will pick up.

While government is unlikely to provide tax relief, there should be fewer tax hikes. He also anticipates less downward pressure on employment and more jobs on offer as a result of government’s recent initiatives to promote private sector and domestic investment. Confidence, adds Lings, should also increase post the elections.

Ultimately, while consumers may not be flush, the deterioration in the economy should abate. He warns consumers to avoid making risky decisions if they are able to hold off for the next few months. This includes maintaining insurance policies and medical aid payments.

Better protection

The year ahead will be characterised by greater protection for policy holders, predicts Johan Ferreira, legal and compliance officer at African Unity Life. The introduction of the Conduct of Financial Institutions (CoFi) Act will provide further protection for policy holders by regulating the market conduct of all financial institutions in South Africa to ensure that consumers are treated fairly, he says.

New products and innovation

Innovation will become the hallmark of new microinsurance entrants, offering a range of fresh new products to the lower-income end of the market, adds Ferreira, making life easier for many South Africans who until now have really only been able to access funeral cover.

Better technology

Machine learning, artificial intelligence, robotics, telematics and big data analytics are increasingly being deployed to create greater efficiency in business processes which will ultimately reduce the overall cost to serve and improve overall service. The personal lines market (which covers products aimed at consumers) is already largely driven by technology although this is still less prevalent in the commercial market.

A weakening dollar will take the pressure off

Keith Wade, chief economist and strategist at Schroders, says that a weaker dollar could be the silver lining for emerging markets. “Although an escalation of the trade wars and the prospect of slower global growth does not bode well, a weaker dollar would help ease pressure on the region. In 2018, rising US interest rates and a stronger dollar squeezed dollar borrowers outside the US, put pressure on emerging-market currencies and forced local central banks to tighten monetary policy. Dollar strength also weakened commodity prices and hurt world trade. In 2019, there is scope for some of these factors to unwind, thereby easing financial conditions and supporting emerging-market assets.”

A word of caution

While we hope that 2019 will bring some positive news and be a bit kinder on our wallets (particularly in the latter half of the year) experts are warning consumers not to overextend themselves with regards to debt in the coming year.

“It’s crucial to understand what you are buying when it comes to financial products and to allocate some funds in the budget towards insurance and saving. Moreover, don’t cancel short-term insurance policies, even if the first few months of the year are tight,” says Ferreira.

He encourages consumers to live within their means and save every month towards retirement.

This article first appeared in City Press.

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