South African consumers reported improved optimism in their household finances during the third quarter. While concerns about inflation remain widespread, findings from TransUnion’s Q3 2026 South Africa Consumer Pulse Study suggest consumers are becoming more deliberate in how they borrow, spend and manage their money.  

Household financial performance strengthened and income expectations remained positive. At the same time, South Africans continue to face ongoing economic pressures, indicating that consumers are balancing improving financial sentiment with careful financial decision making.

Half (50%) of South Africans said their household finances were better than planned at this point in 2026, up from 43% in Q2 2026. Meanwhile, the proportion of consumers who said their finances were worse than planned fell to 34%, down from 38% one year ago. Financial optimism also improved with 73% of consumers expressing optimism about their household finances in the next 12 months, compared with 68% a year ago.

Improvements in reported household finances and future income expectations were accompanied by positive income trends. More than four in ten consumers (41%) reported an increase in household income over the last three months, while only 16% experienced a decline. Looking ahead, nearly eight in ten consumers (79%) expect their income to increase over the coming year, up from 75% a year ago.

According to Ayesha Hatea, director of research and consulting at TransUnion Africa, the findings indicate that consumers are reporting stronger household financial outlooks and income expectations, while remaining mindful of ongoing economic pressures.

“What stands out this quarter is that consumers appear to be taking a more considered approach to managing their finances. The findings indicate that consumers are paying close attention to their household budgets, inflation, borrowing costs and spending habits.  While many report improved household finances and income expectations, affordability and cost-of-living concerns remain an important consideration.”

Despite improved financial sentiment, South Africans remain acutely aware of ongoing cost-of-living pressures. Almost all respondents (97%) said they remain concerned about inflation, while 79% ranked inflation for everyday goods among the top three concerns affecting their household finances for the next six months. Although more consumers now feel their income is keeping pace with inflation, the cost of living continues to place pressure on household budgets.

The study found that 43% of consumers plan to apply for new credit or refinance existing products over the next year, up from 38% a year ago, while 58% believe they would be approved if they needed access to credit, up from 49% a year ago. Perception of access to credit has improved, with 51% saying they have sufficient access to credit products, up from 42% a year ago.

Consumers are, however, approaching borrowing more selectively. More than half (52%) considered applying for new credit or refinancing but ultimately chose not to proceed, up from 42% a year ago. Among these consumers, the cost of credit was the leading reason for not proceeding, according to 34% of those surveyed. More than nine in ten (92%) said rising interest rates affect whether they will apply for credit in the next 12 months. While these findings were captured before the South African Reserve Bank increased the repo rate by 25 basis points to 7.25%, they highlight that borrowing costs were already a significant consideration for consumers and may become an even more important factor in credit decision-making going forward.

“Consumers are demonstrating a more measured approach to borrowing. Rather than simply seeking access to credit, many are carefully evaluating whether a product meets their financial needs and circumstances. This creates an opportunity for lenders to align products, pricing and experiences more closely with evolving consumer expectations,” said Hatea.

Demand for credit remains broad-based, with the greatest proportion of consumers planning to apply for a new credit card (33%), a new car loan or lease (27%) or buy now, pay later services (25%). Consumers continue to embrace digital financial services, with nearly half (49%) reporting using websites or apps to send or receive money. With the use of digital financial services comes expectations around speed and convenience, and 86% of consumers said that real-time approval is important when applying for digital loans.

The study also points to signs of improving financial resilience. Fewer consumers expect to miss payments on bills or loans (32%, down four percentage points year-over-year), more said they’re paying down debt faster (34%, compared to 32% a year ago), and nearly one-third reported contributing more to emergency savings or stokvels (31%, up three percentage points year-over-year).

As digital adoption continues to increase, trust and security remain important considerations. Six in ten (60%) reported being targeted by email, online, phone call or text message fraud in the last three months, with 11% saying they fell victim to it. In addition, 29% said they were notified that their personal or account information had been compromised in a data breach in the last three months.

“South Africans continue to operate in a challenging economic environment, but the data points to a consumer that is becoming increasingly informed, resilient and deliberate in their financial choices. While reported household financial outlooks and income expectations have improved, affordability, value and long-term financial sustainability remain important considerations. Understanding these evolving consumer behaviours will be critical for organisations seeking to build trust and deliver products and services that meet consumers’ needs,” concluded Hatea.

Consumers can get their free annual credit report from TransUnion here.

As many South Africans continue to feel the pressure of rising living costs, affordability is affecting popular credit products in diverse ways as consumers adapt their borrowing strategies rather than stepping away from credit altogether. The latest TransUnion Q2 2026 South Africa Industry Insights Report shows that households are becoming more selective about how they borrow, with consumers prioritising products that align with their needs while carefully managing affordability.

Acquisition Slowed as Portfolio Outcomes Diverged

Growth in retail credit originations (new accounts opened) declined across all major retail lending products during the quarter. New clothing accounts fell 7.8% year-over-year (YoY), retail instalment originations declined 10.3%, and retail revolving originations decreased 12.2%.

While all three credit products experienced lower new account volumes, the underlying customer and portfolio trends across these products tell very different stories.

Despite new account acquisition falling significantly, the clothing account portfolio continued to demonstrate stability, supported by existing customer relationships. Total credit lines increased by 12.4% YoY, outpacing balance growth of 8.0% YoY. This may reflect ongoing line management among existing customers, while the slower increase in balances suggests that consumers are using the additional capacity selectively, using only the credit they need to support day-to-day consumption in a challenging economic environment.

Clothing account performance improved slightly, with serious account-level delinquency (3+ months in arrears, or MIA) decreasing by eight basis points (bps) YoY to 26.5%. However, balance-level delinquency deteriorated by 67 bps, suggesting that repayment pressure is becoming more concentrated among customers carrying larger balances.

The retail revolving credit segment followed a different trajectory. Account volumes declined by 4.5%, the number of active consumers fell 4.4% YoY and outstanding balances decreased 1.9% YoY, indicating continued market contraction. Despite weaker acquisition (origination volumes dropped by 12.2% YoY) and lower participation, performance improved materially, with account-level delinquencies improving by 135 bps YoY to 16.0%. These trends suggest that while the portfolio may be shrinking in size, quality has improved, as tighter lending and portfolio rationalisation have yielded a more resilient borrower base.

Retail instalment lending presented yet another picture. Origination volumes declined by 10.3% YoY and the number of consumers carrying balances fell by 13.9% YoY, yet outstanding balances increased by 12.0% YoY and average balances rose by 9.8% YoY. Serious delinquency deteriorated across all measures: account-level delinquency increased by 146 bps, with similar deterioration for consumer-level and balance level delinquency, pointing to mounting repayment pressure among remaining borrowers.

For lenders, the combination of fewer consumers, higher average balances and broad-based delinquency deterioration reinforces the need to assess affordability carefully at origination and monitor existing portfolios closely for emerging signs of stress, particularly among retail instalment customers.

These trends align with findings from TransUnion’s Q2 2026 Consumer Pulse Study which showed that 52.7% of consumers said that they had cut discretionary spending in recent months, while nearly two thirds (63.4%) said that they actively sought sales and discounts when shopping, to make ends meet.

“South Africa’s retail credit market continued to fragment during the quarter under review, with clothing, retail revolving and instalment lending following increasingly different trajectories,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “While all three products experienced lower origination activity, the underlying performance and portfolio trends suggest consumers are becoming more selective in how they use retail credit and lenders are responding differently across product types. As a result, retail credit can no longer be viewed as a single market, but rather as a collection of products serving distinct consumer needs and risk profiles, each of which may be experiencing varying levels of financial strain or resilience.”

Consumers’ Mobility Choices Influenced by Long-Term Affordability

Despite new passenger vehicle sales increasing strongly during Q2 2026 according to TransUnion’s Q2 2026 Mobility Insights Report, the vehicle finance market recorded modest growth in Q2 2026, continuing to demonstrate demand despite a more challenging affordability environment. Outstanding balances increased 8.0% YoY, supported by a 5.5% YoY increase in average new loan values, while origination volumes grew modestly by 1.1% YoY. Importantly, credit performance continued to improve, with serious account-level delinquencies decreased by 115 bps, indicating that growth continues to be accompanied by relatively strong portfolio performance.

This resilience is particularly noteworthy given shifts occurring elsewhere in the automotive market. According to the Mobility Insights Report, vehicle purchase intentions softened during Q2 2026, particularly among lower- and middle-income consumers. Affordability, financing costs, fuel efficiency and total cost of ownership have become increasingly important considerations in vehicle selection.

At the same time, consumers showed growing interest in technologies that could reduce long-term ownership costs, with hybrid vehicles emerging as an increasingly attractive alternative for consumers focused on fuel efficiency and operating costs. These developments suggest that demand is being reshaped by more value and affordability considerations, rather than disappearing altogether.

“Consumers are increasingly evaluating not only whether they can finance a vehicle, but also whether they can comfortably own and operate it over the longer term. This shift is likely to influence vehicle choice, financing structures and portfolio composition as the market continues to evolve,” said Hatea.

“Affordability pressures appear to be changing the structure of demand rather than reducing participation in the market. Consumers remain interested in mobility solutions but are becoming more selective about how their needs are met. Lenders that can balance access, affordability and risk management are likely to be best positioned to support sustainable growth in the vehicle finance market,” she added.

Personal Loan Trends Continued to Diverge

South Africa’s personal loan market continued to expand during Q2 2026, but the underlying trends diverged sharply between bank and non-bank lenders. While both segments recorded growth, differences in loan size and credit performance point to distinct borrower needs and risk outcomes.

Bank personal loan originations increased 7.7% YoY, outstanding balances grew 8.9% YoY and average new loan amounts increased 9.2% YoY, indicating continued demand for larger-value unsecured credit. These gains were accompanied by improved performance, with account-level delinquency improved by 194 bps YoY to 26.5% and balance-level delinquency improved by 342 bps YoY to 29.3%. Together, these trends suggest that banks found growth opportunities among consumers with the capacity to manage larger borrowing commitments while maintaining disciplined risk management and portfolio quality.

Non-bank personal loan originations increased by 21.3% YoY and the number of consumers carrying balances rose by 12.7% YoY, significantly outpacing the bank personal loan market. However, average new loan amounts declined by 5.9%, indicating that growth was increasingly concentrated in smaller-ticket lending. This points to continued demand for accessible liquidity and short-term credit solutions, particularly among consumers seeking smaller borrowing amounts.

While this supports broader access to credit, the non-bank personal loan segment also experienced a deterioration in credit performance. Serious account-level delinquency increased by 32 bps YoY to 48.3%, while balance-level delinquency rose by 636 bps YoY to 54.6%.

Lenders across these products target different risk groups: bank personal loan originations have tilted modestly towards subprime over the last two years, reaching 56.6% in Q2 2026 compared to 53.8% two years prior. In contrast, subprime non-bank personal loan customers account for 71.3% in Q2 2026, compared to 68.3% two years prior. This suggests that banks are widening access selectively, without dramatically changing their credit posture, while non-bank lenders are servicing the highest risk, highest need consumers – a dynamic that explains the sharp divergence in delinquency trends across the two segments.

“The contrast between bank and non-bank personal lending shows why growth must be assessed alongside loan value and credit performance,” said Hatea. “Understanding which consumers are driving expansion, and whether that growth is sustainable, is becoming increasingly important for lenders.”

Table 1: Key South African Consumer Credit Market Metrics (Q2 2025 vs Q2 2026)

*Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears

“For lenders, sustainable growth will depend on looking beyond volume to the affordability, risk and repayment capacity behind each credit decision,” said Hatea. “Those that can identify where consumers have the capacity to take on credit responsibly, while responding early to emerging stress, will be best positioned to grow without compromising portfolio quality."

South African households are showing signs of meaningful financial adaptation amid ongoing cost pressures, according to TransUnion’s latest Q4 2025 Consumer Pulse Study. While inflation and affordability challenges persist, consumers are becoming more intentional in their financial management, tightening budgets, prioritising savings, and building greater digital and financial awareness.

“Consumers are entering 2026 with a renewed sense of financial discipline,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “We’re seeing households make more deliberate choices, reducing non-essential spending, paying down debt and preparing for the future. This speaks to a financial confidence grounded in awareness and adaptability.”

Financial Adaptation in a High-Cost Environment

Nearly half (48%) of South Africans said their household finances were better than planned in Q4 2025, a sign of growing stability in an economy still defined by high living costs. Yet, 36% of consumers anticipate being unable to meet at least one bill or loan payment in full, revealing the continued strain on affordability.

In response, many households are taking deliberate steps to manage their finances. Half have reduced discretionary spending on non-essential activities such as dining out, entertainment, and travel, while more than a third (34%) have cancelled subscriptions or memberships. At the same time, 38% of consumers plan to increase their contributions toward retirement savings or investments, 35% are accelerating debt repayments, and 27% are setting aside more in emergency funds or stokvels.

These actions suggest that South Africans are not merely reacting to economic pressure but are intentionally strengthening their financial resilience. “Consumers are demonstrating a more strategic approach to money management,” said Hatea. “They’re preserving stability today while laying the groundwork for tomorrow.”

Younger Optimism Meets Experienced Caution

Generational insights reveal that financial resilience takes on different forms across age groups. Younger consumers, particularly Gen Z (18-28 years) and Millennials (29-44 years), tend to be the most optimistic about their financial future and are also the most likely to apply for new credit within the next year, with 42% and 39% expressing this intent, respectively.

In contrast, Gen X (45-60 years) and Baby Boomers (61+) demonstrate a more cautious approach, with only 33% and 9% likely to seek new credit, instead prioritising debt reduction and savings. Spending patterns further illustrate this divide: younger consumers plan to increase their spending on digital services such as internet and other discretionary activities like dining out or travel, while older generations indicate they will prioritise boosting retirement funds and strengthening emergency savings in the coming months.

Credit Access and Inclusion

Credit remains a vital tool for long-term financial mobility, with 91% of South Africans recognising its importance in achieving their financial goals. Yet, access to credit is uneven: only 42% feel they have adequate access, while 33% believe they do not. Despite this strong demand, just 36% plan to apply for new credit or refinance existing debt over the next year, with credit cards (30%), personal loans (28%), and car loans (20%) among the most popular products.

However, 44% of those who considered applying ultimately decided against it, citing barriers such as high borrowing costs (33%), fear of rejection due to their credit history (26%), and concerns over income or employment (24%).

“These findings highlight a need for more inclusive and transparent lending models,” said Hatea. “Consumers believe that a broader use of alternative data, such as rental or buy-now-pay-later payment histories can help extend fair access to credit while supporting responsible borrowing.”

Digital Fraud Threats Drive Demand for Simplified Protection Tools

Digital fraud continues to pose a significant threat to South Africans, with 59% targeted in Q4 and 12% falling victim. The most commonly reported schemes include money or gift card scams (32%), vishing (30%), phishing (29%), and smishing (27%). Despite these threats, 46% of consumers successfully detected and avoided fraud, reflecting growing vigilance. Among those affected by data breaches, 42% changed their passwords, 35% checked accounts for unauthorised activity, 30% closed compromised accounts, and only 16% signed up for identity monitoring.

In the past two months, reacting to security concerns, 58% changed passwords, 23% enabled multi-factor authentication, and 37% checked their credit reports. Yet, many remain unsure how to respond: 53% of those who took no action cited uncertainty about the steps to take, while 22% felt overwhelmed by cybersecurity information.

Empowered and Financially Aware Consumers

Financial awareness among South Africans continues to rise, with 93% recognising the importance of credit monitoring. Engagement with credit reports is also increasing, with 31% checking monthly, 16% weekly, and 8% daily.

Nearly half of consumers believe their credit score would improve if alternative data, such as rental payments or buy-now-pay-later histories, were considered, particularly among younger generations.

“This growing awareness of credit health is encouraging,” said Hatea. “Consumers are becoming more proactive and engaged, and that creates a powerful opportunity for businesses and lenders to support them with relevant, transparent financial tools.”

Building Financial Confidence for the Future

The Q4 findings paint a picture of a nation adapting with purpose, cautious but confident, pragmatic yet forward-looking. As South Africans continue to manage affordability pressures, the emphasis on long-term financial planning, inclusion, and protection is reshaping how consumers engage with the financial system.

“Resilience has become the defining characteristic of South African consumers,” said Hatea. “They’re not waiting for conditions to change, they’re taking control of their financial journeys, showing that confidence and caution can coexist.”

Consumers can get their free annual credit report from TransUnion here.

Notes to Editors: An online survey of 992 adults in South Africa was conducted between 25 September and 9 October 2025 by TransUnion with Dynata, using an online panel across desktop, mobile, and tablet. The survey, administered in English, included respondents aged 18 and older from all regions, with quotas applied to ensure demographic representation by age, gender, household income, race, and region. Generational groups were defined as follows: Gen Z (18–28), Millennials (29–44), Gen X (45–60), and Baby Boomers (61+).

TransUnion’s Q3 2025 South Africa Industry Insights Report highlights key trends in the South Africa credit market: vehicle asset finance continued its recovery, with stable account volumes and rising balances supported by longer loan terms and more affordable vehicle choices. Credit card usage expanded, with total book balances growing faster than account volumes, even as average balances per card remained stable and new account credit limits were reduced. Non-bank personal loans surged, driven by higher-risk consumers, though elevated delinquencies underscore the importance of strong affordability checks and consumer safeguards.

These shifting patterns in credit demand, usage and risk occurred against the backdrop of a cautiously improving economy. A 25 basis point (bps) interest rate cut in July, driven by favourable inflation trends, gave consumers some relief. However, unemployment remained high^[1] at 31.9% for the quarter, highlighting persistent labour pressures that constrained the wallets of many consumers.

Within this context, the credit market showed signs of strategic adjustment. Consumers — especially younger cohorts — relied more on credit to manage day-to-day expenses and cash flow, while lenders recalibrated growth and risk strategies.

Vehicle Asset Finance Recovery Extended

South Africa’s vehicle finance market grew for the third consecutive quarter, driven by younger consumers in prime and below-prime risk tiers. New account originations rose 17.2% year-over-year (YoY), with the average new loan amount increasing to R412,000, up from R400,962 a year earlier.

Growth was supported by a shift in the used-to-new financing ratio, which fell from 2.67 in Q3 2020 to 1.03 in Q3 2025. Near-parity between new and used financing reflects the availability of budget-friendly new models, often compact or entry-level, that have narrowed the cost gap.

Consumers also opted for longer loan terms, prioritising monthly affordability over total lifetime financing cost. In Q3 2025, 49.6% of loans were for 72 months or longer, up from 38.2% four years ago and 45.6% in Q3 2024.

First-time buyer participation remained strong at 42% of originations, slightly up from 40% a year earlier. Nearly one-third (32%) of originations were to Gen Z consumers (born 1995–2010). Among first-time buyers, 80% were prime or below^[2], compared to 48% for existing borrowers.

Account-level delinquencies stayed elevated at 7.2%, which underscores the need for early warning and pre-delinquency outreach, especially for borrowers showing signs of payment strain and increased reliance on credit.

“The market is stabilising away from the post-pandemic skew toward used vehicles, supporting consumers’ preferences for warranty coverage and predictable maintenance while expanding inclusion and access,” said Hatea. “In an increasingly competitive market, lenders need to calibrate loan terms, deposits, and residual values to match current conditions and customise products and insurance bundles for segments returning to new purchases.”

Credit Cards Reinforced Role as Financial Buffers for Consumers

Consumers remained under pressure: more than four in ten (41%) households said their income was not keeping up with inflation in Q3 2025, and 77% listed inflation for everyday goods as a top concern, according to TransUnion’s Q3 Consumer Pulse Study.

As consumers sought liquidity amid these concerns, credit card originations rose 13.8% YoY, although average credit limits on new cards issued fell 9.8% YoY. Outstanding balances increased 7.7% YoY, and average balances per card were up 2.6% YoY. The risk mix of card originations shifted towards higher risk borrowers: subprime consumers comprised 58.3% of new cards opened in Q3 2025, up from 52.4% a year earlier, while the share held by prime and above borrowers declined.

Lower credit limits on new cards likely reflect lenders’ efforts to manage affordability and mitigate risk exposure, even as originations skewed toward higher-risk borrowers.

Account-level delinquency increased to 12.7%. This, along with a heavier subprime mix, stable balances, and lower credit lines suggests that lenders have deliberately shifted their focus to riskier borrowers to fuel growth.

Consumers also managed their financial obligations by taking out additional credit. This was evident in the Q3 2025 TransUnion Consumer Pulse Report which found that nearly one third (30%) of surveyed consumers stated that they took an additional credit product to pay off an existing credit product during the quarter.

“While lenders seek growth, they are simultaneously tightening credit lines and deploying early interventions to protect portfolio quality,” said Hatea. “Dynamic credit line strategies and early interventions are key. Expanding pre-delinquency outreach and offering short-term hardship solutions can prevent roll-through into missed payments beyond three months, especially for subprime consumers carrying larger balances.”

Bank and Non-Bank Personal Loan Trends Diverged Further

Differences in growth and risk patterns between bank and non-bank lenders widened in Q3 2025. Banks expanded cautiously, focusing on larger, purposeful loans, while non-bank lenders grew through smaller, short-term loans aimed at higher-risk segments. These shifts reflect differing consumer targeting strategies of the two lender groups and increasing affordability pressures on higher-risk borrowers.

Bank-issued personal loan originations rose 7.6% YoY, with average new loan amounts up 9.3% YoY, reinforcing a trend toward larger loans for purposeful borrowing. However, the number of consumers carrying a personal loan balance fell 3.6% from the previous quarter, suggesting loan consolidation and/or repayment by borrowers. Account-level delinquency reached 28.1%, indicating repayment strain despite banks’ disciplined approach to growth and proactive measures to manage long-term defaults.

Non-bank personal loan originations rose 8.5% YoY, but average new personal loan amounts fell by the same margin of 8.5%. Average balances per account dropped 31.9% YoY, showing that these loans are increasingly used for short-term or emergency needs rather than financing larger purchases or debt consolidation. Risk indicators deteriorated sharply: account-level delinquencies surged upwards to 49.4%, highlighting rising financial stress among non-bank personal loan borrowers, compounded by a greater concentration of subprime consumers.

“Personal loan lenders need to balance access with sustainability,” said Hatea. “Stronger affordability checks and better early warning systems can prevent roll-through into deeper delinquency. Proactive engagement with at-risk consumers and tailored hardship solutions will help preserve portfolio health while maintaining access to credit.”

Table 1: Key South African Credit Market Metrics (Q3 2025 vs Q3 2024)

 *Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears

With an improving macroeconomic environment, driven by moderating inflation and associated interest rate cuts, continued shifts in the consumer credit market are to be expected. However, Hatea concluded: “Even though there are cautious signs of improvement, lenders and policymakers must remain agile when balancing growth with resilience. Refining segmentation strategies and enhancing early risk detection will be key to supporting consumer financial health and maintaining long-term portfolio stability.”
 

^[1] Trading Economics South Africa Unemployment Rate

^[2] Scores are based on TransUnion’s CreditVision® generic scoring methodology. Risk distribution key: subprime (0-625), near prime (626-655), prime (656-695), prime plus (696-720), super prime (721-999).

South Africa’s automotive market shifted into top gear in the third quarter of 2025, posting its strongest sales performance in more than a decade as greater macro-economic stability, easing interest rates and a firmer rand supported renewed consumer demand. According to TransUnion’s Q3 2025 Mobility Insights Report, total new-passenger-vehicle sales reached 111 697 units, 23.4% higher year-on-year (YoY), while new vehicle inflation dropped to a record low of 1.5% (since tracking began in 2008), creating one of the most competitive pricing environments in recent memory.

“Affordability and choice are redefining South Africa’s automotive landscape,” says Lee Naik, CEO TransUnion Africa. “Consumers are seeking greater value and flexibility and manufacturers that meet this demand through innovation and pricing discipline are winning the race for growth.”

Affordability Drives Record Growth and Market Realignment

Although established OEMs returned to positive growth in Q2 and Q3 2025, the market’s transformation is being led by Chinese manufacturers expanding nearly nine times faster than the overall market, with YoY growth of 89% in Q2 and 88% in Q3.

Their combined share has quadrupled since 2021 to more than 15%, powered by competitively priced, feature-rich SUVs and sedans that appeal to cost-conscious yet tech-savvy buyers. Top-performing value brands YoY included JAC (67% volume increase), GWM (54%), Mahindra (42%) and Chery (35%), while BMW (27%) proved that premium marques can still thrive by combining desirability with strong product pipelines.

“This isn’t a short-term surge, it’s a structural reset,” adds Naik. “The success of value-driven models shows how affordability, technology and trust are now the true levers of brand growth in South Africa.”

Younger and High-Income Buyers Sustain Demand

Despite surging sales, TransUnion’s recent Consumer Pulse Survey shows a modest easing in purchase intent, with the share of respondents likely to buy a vehicle in the next three months declining from 19% in Q2 to 17% in Q3. The report suggests that current sales momentum is being driven primarily by pent-up demand, dealer incentives and fleet renewals, rather than broad-based consumer confidence.

Purchase behaviour also remains sharply segmented across both age and income groups. Younger consumers continue to lead intent, with 21% of Gen Z and 19% of Millennials planning to buy a vehicle in the next three months, compared to 13% of Gen X and 8% of Baby Boomers. From an income perspective, high-income households earning R200 000 or more per month show the strongest intent at 34%, while middle- and lower-income consumers remain significantly more cautious in their purchasing outlook.

Electrification: A Tale of Price and Generation

Internal-combustion vehicles (ICE) remain the single largest category in consumer purchase intent, accounting for 42% of consumer preference, while interest in hybrid (39%) and plug-in hybrid (24%) models is steadily increasing. The shift toward electrification is most pronounced among Gen Z consumers, with 55% favouring hybrids and 32% considering battery-electric vehicles (BEVs).

This generational shift toward greener technology is evident among high-income buyers, with 75% considering plug-in hybrids, driven primarily by their perceived affordability. In contrast, preference for ICE vehicles remains largely affordability-based among lower-income segments. Higher budgets within affluent households enable greater consideration of hybrid electric (HEV), plug-in hybrid (PHEV), and battery electric vehicles (BEV), reinforcing an emerging “electrification divide.” This dynamic presents a significant opportunity for OEMs and financiers to tailor product offerings and financing strategies to meet the distinct needs of different age and income segments.

Connected Cars: Data Becomes the New Engine

Q3’s Mobility Insights Report special feature, The Connected Road, explores how connected-car technology is transforming mobility. Connectivity is now standard in most post-2015 vehicles, enabling real-time navigation, predictive maintenance, remote access, and advanced safety systems. Yet global data warns of “connectivity fatigue”: Over three quarters (76%) of drivers internationally don’t subscribe to connected services, mainly due to cost.

Naik says: “South Africa has a chance to leapfrog global missteps by focusing on value-adding applications, safer driving, cheaper insurance and smarter maintenance rather than gimmicks.”

Exports Rebound and Dealer Confidence Climbs

Passenger-vehicle unit exports rose 4.1% YoY after a steep Q2 contraction, driven by a 63.7% September surge that lifted shipments to a six-year high. Meanwhile, the RMB/BER Motor Traders Confidence Index advanced to 54, marking its second net-positive reading of 2025 and notably placing it above the neutral 50-point mark, which signals growing dealer optimism amid sustained sales momentum and improving export conditions.

Balancing Value and Transformation

The convergence of affordability, segmentation, electrification, and connectivity signals a pivotal shift in the automotive industry. “The future belongs to brands and financiers that master both the value-driven present and the connected, electrified future,” concludes Naik. “Data-led insight will be the bridge that connects today’s strategies with tomorrow’s innovation

Read the full TransUnion South Africa Q3 2025 Mobility Insights Report here.

According to the newly released TransUnion® (NYSE: TRU) H2 2025 Update to the Top Fraud Trends Report, the rate of suspected digital fraud^[1] was the highest in the consumer lifecycle at account login for South Africa with 2.6% of those types of transaction attempts when the consumer was in the country being suspected of digital fraud in the first half (H1) of 2025. This aligns with a global trend of fraud shifting to account takeover attempts which typically occur at login. Globally, 4.3% of account login transactions in H1 2025 were suspected of digital fraud.

The report, which draws on proprietary data from TransUnion’s global intelligence network from billions of transactions from over 40,000 websites and apps and a consumer survey across 18 countries, reveals that fraud is growing.

“South Africa stands at a critical juncture in its digital evolution where opportunity and vulnerability intersect. As the nation embraces rapid digital transformation, the surge in online activity has inadvertently opened new doors for fraudsters, whose tactics are growing more sophisticated by the day. This convergence of accelerated digital adoption, economic strain and criminal innovation has created a complex risk landscape,” said Amritha Reddy, senior director of fraud product management TransUnion Africa.

According to analysis of TransUnion’s customers in its global intelligence network, digital account takeover volume worldwide grew 21% year-over-year (YoY) from H1 2024 to H1 2025, signalling a rapid escalation. The volume of digital account takeovers surged 141% from H1 2021 to H1 2025, underscoring persistent rise of this fraud type over time and reflecting the increasing sophistication of fraudsters who exploit stolen credentials and bypass authentication systems.

"As account takeover fraud surges, businesses can no longer afford solely reactive defences,” said Reddy. “The growing sophistication of fraudsters demands a proactive investment in layered security and identity intelligence. In today’s threat landscape, protecting customer accounts is not just a priority, it’s a business imperative."

Highest Rate of Suspected Digital Fraud in Video Gaming

Among industries analysed globally, the video gaming sector recorded the highest percentage of suspected digital fraud attempts in the first half of 2025, reaching 13.5%. This represents a significant 28% rate increase compared to the same period in 2024, underscoring the growing vulnerability of this sector to fraudulent activity.

For transactions where the consumer was in South Africa, the rate of suspected digital fraud attempts from February to May 2025 was the highest in video gaming at 7.7%. The greatest increase in the volume of digital transactions suspected to be fraudulent over that time was in the insurance industry, with a 154% uptick.

Chart 2: Suspected Digital Fraud Attempts in South Africa, by Sector

^{Source: TransUnion global intelligence network}

“As the risk from consumer scams threatens identity integrity, organisations should rely on a mixture of data, risk signals, technology and tools to prevent fraud,” said Reddy. “The Report highlights that business leaders rank^[2] identity verification, device reputation and behavioural biometrics as the leading three fraud prevention technologies.

“Businesses and financial institutions should also invest in sustained education and awareness campaigns to mitigate against schemes like account takeovers. Preventing fraud must by necessity be a multi-pronged strategy, if businesses and consumers are to stay ahead of fraudsters whose strategies continue to evolve too,” she said. “By harnessing advanced technologies, fostering cross-sector collaboration, and prioritising consumer trust, South Africa can chart a path toward a secure and inclusive digital future.”

Consumer-Reported Exposure to Fraud Grows Amid Gaps in Awareness and Prevention

Globally, consumers continue to face a wide range of scams, with tactics often tailored to regional behaviours and vulnerabilities. TransUnion’s survey found that 48% of consumers surveyed globally reported being targeted by email, online, phone call or text messaging fraud from February to May 2025, with 59% of South Africans saying the same thing. Globally, 52% were unaware that they were targeted, as were 42% of South Africans, indicating potential fraud under-recognition and a gap in fraud awareness.

Consumers in five of the six African countries surveyed reported money or gift card scams as the most experienced fraud type. In South Africa money or gift card scams was the most common fraud type – reported by 33% of those who said they were targeted with email, online, phone call or text messaging fraud from February to May 2025. Among those South Africans who said they were targeted, the next most frequently reported scams were phishing (31%), smishing (30%), and vishing (29%), with these three designed to deceive individuals into giving up their valuable personal or financial information.

South Africa Saw the Greatest Percentage of Respondents in Africa Indicating They Fell Victim to Fraud from February to May 2025

^{Source: TransUnion consumer survey}

“As scammers continue to evolve their tactics to enrich themselves, it’s more important than ever for consumers to regularly review their credit reports to ensure all listed information is accurate,” said Reddy.”

TransUnion came to its conclusions about digital fraud and data breaches based on intelligence from its array of TransUnion fraud prevention solutions. To learn more about how TransUnion fraud prevention solutions can help businesses avoid fraud and prevent fraud losses, click here.

Specific country and regional data in the report includes South Africa, Botswana, Brazil, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Hong Kong, India, Kenya, Mexico, Namibia, Nicaragua, the Philippines, Puerto Rico, Rwanda, Spain, the United Kingdom, the United States and Zambia. Download the TransUnion H2 2025 Update to the Top Fraud Trends Report for more information and insights about the global fraud trends.

^{[1] Suspected digital fraud attempts reflect those which TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation.}

^{[2] As found by TransUnion’s online business survey conducted from 29 May to 6 June 2025 in partnership with third-party research provider, Dynata. Findings were included in TransUnion’s H2 2025 Update to the Top Fraud Trends Report}

Developed with creative agency One Over One and production partner Run Jump Fly, the film fuses artificial intelligence with authentic storytelling to capture the experiences of everyday South Africans navigating the financial system. It serves as both a creative innovation and a powerful social statement – demonstrating how data, when used responsibly, can shine a light on those who are often unseen.

“The AI film is more than a creative milestone; it’s a deeply human story told through the lens of technology. Using AI-generated visuals, the film brings to life the emotional realities behind financial data – the hope of opportunity, the weight of exclusion, and the power of visibility,” said Amy Beck, CMO of TransUnion Africa. “Rooted in empathy and powered by innovation, the film embodies our belief that technology should serve people, not the other way around. It invites viewers to look past the numbers and be part of a movement changing the way we see each other”.

Turning Data into Impact

The AI film builds on the success of TransUnion’s Be the Reason Things Change movement, which has inspired South Africans to act – making the invisible visible and driving meaningful impact across the country.

In just one month, the campaign achieved:

• 10,838 panels peeled nationwide (this includes physical and digital billboard panels), each unlocking access to free credit education e-learning courses, valued at R2,000 each.
• Education fund prizes awarded to five individual winners, valued at R20,000 each, awarded directly to recognised educational institutions or nominated beneficiaries.
• Ten tech-for-learning prizes, worth R7,000 each, comprising of a laptop and 12 months of data, equipping recipients with the tools they need to thrive in a digital-first world.

These results go beyond metrics – they represent real lives changed through knowledge, opportunity and empowerment. One of the five recipients of the R20,000 education fund prize, Roggers Mamaila, shared how the campaign has made a lasting impact on his family’s future: “This contribution towards my family’s education means more than words can express. It’s a tangible step toward a better future – one my family will carry with pride for years to come. It’s proof that when people are seen, real change becomes possible.”

AI with a Purpose

In an age where artificial intelligence often feels distant or impersonal, TransUnion’s new film reframes the narrative – showing how innovation, when guided by empathy, can accelerate financial inclusion and create lasting change.

Unlike many AI-driven creative pieces that use artificial intelligence in fragments – generating snippets, visuals, or voiceovers – this film is a fully integrated, end-to-end AI production. From concept to execution, every aspect of the film was shaped using AI tools, making it a first-of-its kind on the African continent. What sets this film apart is not just its use of technology, but its authenticity and purpose. The film draws its narrative from real lives and lived experiences, transforming data into emotion, and statistics into stories that matter.

Every frame is a reflection of the campaign’s core belief: that visibility leads to change. This isn’t just an experiment in technology – it’s a movement in storytelling. The piece invites viewers to rethink what’s possible when technology and trust work together – to see every data point as a story, every statistic as a person, and every innovation as a chance to drive inclusion.

The campaign continues to challenge traditional notions of creditworthiness by advocating for alternative data and inclusive scoring models that better reflect the realities of underserved communities.

Watch the AI brand film and learn more at: https://www.transunion.co.za/bethereason

Why Knowing Your Credit Score Matters

Traditionally, your credit score is a snapshot of how well you have managed credit and debt in the past, based on the information in your credit report. Lenders, landlords, insurers, and even employers sometimes use it (or check related credit data) to assess risk. If your score is strong, you could qualify for better interest rates or favourable credit terms. But if it’s weak or contains errors, you might end up paying more or having applications declined.

But it’s not just about access. Reviewing your own credit report gives you valuable insight into your financial history. It shows you what accounts are open, whether payments were missed, and if any accounts were opened fraudulently in your name. That kind of awareness helps you move from being passive to active in managing your financial life.

This shift is already visible in South Africa. According to TransUnion’s Q3 2025 Consumer Pulse Study, 35% of respondents checked their credit report for signs of fraudulent activity, while 51% did so to improve their credit score.

Fatgie Adams, Head of Credit Risk Solutions at TransUnion, explains: “Understanding your credit report and score is one of the simplest yet most powerful ways to take control of your financial future.”

Given that many South Africans expect to apply for or refinance credit in the coming year (about 37%, according to the same study), knowing where you stand becomes even more critical.

Three Simple Ways to Understand Your Credit Score

Understanding your credit score doesn’t require fancy tools or technical knowledge. Here are three clear, practical steps to help you take charge:

1. Go Through Your Credit Report

Start by accessing your credit report, many credit bureaus or services offer free or low-cost access. Review the main sections carefully:

• Active accounts: Which credit lines or loans are currently open?
• Payment history: Were payments made on time, or were any missed?
• Credit inquiries: Who has recently requested access to your credit information?
• Balances vs. limits: How much of your available credit are you using?

Going through each section helps you spot errors (for example, an unexpected account) or identify areas for improvement. This simple exercise turns your credit score from a mystery number into a tool you can understand and manage.

2. Understand How Everyday Habits Affect Your Score

Many people assume a credit score is fixed, but it changes over time, and many factors are within your control:

• Pay on time: Late or missed payments often have the biggest negative impact.
• Use credit conservatively: Using less than 30% of your available credit generally helps your score.
• Avoid multiple new credit lines at once: Too many recent applications can signal risk to lenders.
• Be consistent: A steady, predictable credit history is viewed more favourably than big fluctuations.

3. Review Regularly to Catch Fraud or Changes Early

Credit monitoring isn’t just about improving your score it’s also a defence against fraud. Make it a habit to:

• Check your credit report every few months, or before major financial decisions.
• Look for new accounts you didn’t open.
• Check for unfamiliar credit enquiries.
• Compare balances against known credit limits.
• Dispute any suspicious entries promptly.

Treat reviewing your credit report as a financial hygiene routine, one that helps you catch issues early before they escalate. Adams adds: “Reviewing your credit report data regularly helps you see how daily decisions affect your score. That visibility lets you catch issues before they become serious.”

Why This Matters Beyond Individuals

Many South Africans continue to face challenges accessing formal credit and quality financial services. Traditional systems often feel exclusive, especially for underserved individuals and small businesses, because formal credit systems rely heavily on past borrowing behaviour as the main measure of creditworthiness.

According to TransUnion’s CreditVision® Telco Data Score modelling, over 1.4 million credit-invisible South Africans open new credit accounts each year, contributing to more than four million new accounts over the past three years. Yet traditional scoring models frequently fail to assess these consumers accurately, leaving over 16 million adults outside the formal credit system. Successfully integrating these and other excluded consumers into the economy could contribute an estimated R173 billion to South Africa’s GDP.

TransUnion is shifting the paradigm by embracing alternative data and developing new scoring models for example, using utility or mobile payment patterns (with user consent) to ensure that individuals who were once unclassifiable can now be assessed fairly and accurately. Its “Be the Reason Things Change” campaign responds to this need by equipping the public with practical tools, credit education, and the confidence to take charge of their financial futures.

“Greater credit visibility and education can lead to fairer interest rates, fewer surprises in loan applications, and stronger trust in financial systems,” says Adams. “When more people are credit-aware, lenders and markets work better too. Credit education is not a niche luxury; it’s a critical tool for building financial resilience and inclusion.”

TransUnion’s latest research into South Africa’s FinTech lending market reveals critical insights into borrower behaviour, loyalty and risk based on an analysis of 4.3 million South Africa consumers. The study highlights patterns that present both opportunities and challenges when navigating a rapidly digitising credit ecosystem.

South Africa’s FinTech sector is undergoing rapid transformation, signalling a major shift in how consumers will engage with credit in the next five years, and beyond. As digital adoption accelerates, lenders will need to adapt their approach to South African consumers if they’re to attract, retain and grow relationships with digitally engaged borrowers.

Emerging FinTechs are offering diverse solutions such as buy now, pay later (BNPL) loans with interest free payments, flexible financing for small and medium enterprises, point-of-sale credit and insurance coverage. Financial services are now more accessible than ever before. However, it’s essential that the lenders behind these solutions understand who is using them, how they engage with credit, and whether borrowers’ loyalty can help drive sustainable growth.

“As competition intensifies and regulatory frameworks evolve, lenders must go beyond product innovation and develop a deeper understanding of consumer behaviour,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “Our study offers a data-driven lens into the FinTech borrower profile, helping lenders build loyalty, manage risk, and drive inclusion.”

TransUnion analysed South Africans who held at least one open FinTech credit obligation in Q4 2024, including long-term personal loans, short-term personal loans and credit cards, to learn more about the consumers driving growth in the sector. The study examined risk profiles, delinquency trends, product breadth, and loyalty patterns among FinTech borrowers. Further, the study compared those characteristics to similar-risk consumers using traditional lender products only (non-FinTech borrowers^[1]), providing a deeper understanding of growth opportunities for South Africa’s credit market.

Five Themes Shaping FinTech Lending Strategy

1.     FinTechs are not yet the main gateway to financial inclusion.

Despite South Africa’s high mobile penetration^[2], 69% of New-to-Credit consumers – those with no prior reported credit history – enter the market via retail accounts, with clothing accounts being the most common first product. FinTechs have an opportunity to reposition themselves as enablers of financial inclusion by partnering with retailers and mobile ecosystems to reach underserved segments.

2.     FinTech borrowers are concentrated in below prime risk tiers^[3].

While many FinTech borrowers have experience managing credit, 95% of FinTech borrowers with 0–1 month loans are in below prime risk tiers, compared to 29% for bank borrowers and 69% for non-bank lender borrowers. For 2–12 month loans, 94% of FinTech borrowers are below prime, in contrast to 58% for banks and 50% for non-banks. This highlights greater risk exposure among the FinTech borrower base and suggests that FinTech lenders could benefit from leveraging trended and alternative data to better predict repayment risk and reduce delinquency rates, particularly among below-prime borrowers.

3.     FinTech borrowers are not all underserved.

Among 0–1 month term borrowers, 44% of FinTech consumers already hold two or three credit products and 27% hold four or more, debunking the assumption that FinTech borrowers have limited access to credit. Additionally, more than 56% of FinTech personal loan borrowers hold credit products with non-FinTech lenders. These multi-lender relationships underscore the need for lenders to view borrowing patterns holistically and better understand the reasons why borrowers may be seeking credit from different lender types, in order to develop strategies for capturing more of their customers’ wallets.

4.     FinTech borrowers underperform on repayments.

While there are no material differences by lender type for longer-term loans, there are significant differences for 0-1 month loans. This is an important consideration as these shorter-term loans are more likely to be used by borrowers earlier in their credit journeys when they are potentially more financially vulnerable. After controlling for borrower risk score, delinquency rates (consumers 2+ months in arrears on a loan) were highest among FinTech borrowers: The consumer-level delinquencies were 74% for 0–1 month loans from FinTechs compared to lower rates for bank loans (53%) and non-bank lender loans (53%), underscoring the need for enhanced risk management strategies tailored to the FinTech segment.

5.     FinTech borrowers are loyal to FinTech lenders

TransUnion’s research provides compelling evidence of borrower loyalty within the FinTech lending ecosystem. Among consumers who originated a 0–1 month personal loan, 65% opened another 0–1 month loan within 12 months, and 93% of those chose a FinTech lender. More than one fifth (21%) of these borrowers progressed to a 2–12 month loan, with 80% remaining with FinTech providers.

Among consumers who started with a 2–12 month personal loan, 95% opened another 2–12 month loan, with 60% choosing a FinTech lender. In addition, 85% of these borrowers also opened a 0–1 month loan, and 38% did so with FinTech lenders. These patterns demonstrate a strong preference among borrowers to remain within the FinTech category, even as they take loans over longer time periods. This loyalty presents a strategic opportunity for FinTech lenders to deepen relationships through personalised engagement, targeted product offerings, and proactive risk management.

However, loyalty in product originations does not necessarily translate into repayment prioritisation. When consumers hold loans with both FinTech and non-FinTech lenders, they tend to prioritise repayments to traditional institutions. Among consumers with 2–12 term personal loans from both FinTech and non-FinTech non-bank lenders, delinquency measured as 1+ month in arrears was 33% for FinTechs, compared to 26% for non-FinTech non-bank lenders. Similarly, for those with loans from both FinTechs and banks, delinquency was 30% for FinTechs versus 28% for banks.

The takeaway for lenders is that while FinTech borrowers are loyal in terms of repeat borrowing, they may deprioritise FinTech repayments when under financial pressure. This highlights the need for FinTech lenders to strengthen their engagement strategies, build trust, and implement early intervention tools to improve repayment outcomes and long-term value.

“If lenders are to benefit from the anticipated growth in the FinTech lending market, it’s essential that they offer financial literacy and awareness education to help consumers understand how responsible credit use can support their financial goals. Once consumers have opened FinTech-issued products, lenders can activate lifestyle triggers to anticipate consumer progression so that they can deliver timely, relevant engagement to drive loyalty and long-term value. This can be further supported by deploying predelinquency models to identify early signs of consumer stress, and to initiate recovery efforts before risk escalates,” said Hatea.

^{[1] FinTech consumers were those with an open FinTech long-term personal loan, short-term personal loan, or credit card. Non-FinTech consumers were a control group with no FinTech obligations of any type in their history, who held a long-term personal loan, short term personal loan or credit card from a non-FinTech lender}

^{[2] 118,600,000 connections across 60,690,000 people https://datareportal.com/reports/digital-2024-south-africa}

^{[3] Scores are based on TransUnion’s CreditVision® generic scoring methodology. Risk distribution key: subprime (0-625), near prime (626-655), prime (656-695), prime plus (696-720), super prime (721-999).}

These assumptions include that younger consumers do not value credit, they are disengaged from the credit market, are irresponsible with debt, have low appetite for new credit, lack loyalty to lenders, and struggle to meet payment obligations.

They could also partly explain South Africa’s low 13% credit card market penetration among both Millennials (aged 29 to 44) and Gen Z (aged 18 to 28). Furthermore, Gen Z consumers adopt credit cards and personal loans at half the rate that Millennials did at the same age, suggesting limited growth for lenders as these consumers age.

“Our research suggests systemic barriers to credit access in South Africa, rather than a lack of demand,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “It also highlights that lenders have opportunities to innovate in product design, onboarding and education to empower these consumers to manage everyday expenses and unexpected financial needs as they progress towards achieving key life milestones.”

To challenge perceptions about younger consumers, TransUnion South Africa conducted a focused study^[1] to test lenders’ perceptions, analysing participation, engagement and repayment behaviour among the country’s 4.3 million credit-active population aged 18 to 30.

Myth 1: Younger consumers don’t value credit

More than six in 10 (62%) younger consumers believe that access to credit is important to achieve their financial goals^[2], with 76% saying that credit can give them access to new opportunities that could lead to a better quality of life. Younger consumers’ favourable perception of credit exceeds that of older consumers, 57% of whom believe access is important, and 71% of whom believe that access to credit can unlock new opportunities. However, less than a quarter (24%) of young consumers view credit as a risk to prudent financial management.

“Younger consumers increasingly see credit as a way to achieve their financial goals – even more so than older consumers,” Hatea said. “With most disagreeing that applying for credit signals poor financial management, it’s clear that opportunities exist for segment-focused products supported by financial literacy initiatives.”

Myth 2: Younger consumers are disengaged and don’t participate in the credit market

Nearly four in 10 (39%) young consumers feel that they have sufficient access to credit and lending products, with 49% believing that they would be approved for a credit product if they needed one.

It’s worth noting that, over time, consumers’ choice of credit product shifts. Reviewing credit card originations across a six-year period showed similar trends across time: 2% of 18 year old credit active consumers hold a credit card, compared to 19% of 30 year olds. Their participation in secured credit products increases with age, reaching parity with the general population by 30 and reflecting life stage realities like income, affordability and asset ownership, rather than disengagement.

“These shifts show that young consumers are engaged with the credit market, particularly with unsecured products, but their participation evolves across product types and life stages,” Hatea said.

Myth 3: Younger consumers are irresponsible in leveraging debt

Credit utilisation and average balances are well aligned with risk-based access that improves with age. At age 21, 95% of consumers are classified as subprime, dropping to 74% by age 30, reflecting a maturing credit profile.

Despite limited access, younger borrowers demonstrate measured usage: the average credit card balance at age 21 is R11,000, rising to R24,000 by age 30, while utilisation among near-prime consumers increases from 58% to 78% over the same age range.

“These trends highlight responsible engagement with credit and clearly refute the myth that younger consumers overextend their credit exposure, or are reckless with credit,” Hatea said. “As young consumers gain access to larger loan amounts, they move into better risk categories, reflecting greater lender trust in recognition of responsible repayment behaviour.”

Myth 4: Younger consumers have a low appetite for credit, and lack loyalty to lenders

While one third (33%) of the general population intends to apply for new credit within the next year, this increases to 45% for Gen Z consumers. Additionally, 36% of these consumers inquired about new credit over the six years studies, compared to 28% of all consumers. However, only 3.4% of younger consumers return to their first lender for new credit – similar to the 3.6% average across all consumers.

“The data shows that younger consumers do indeed have appetite for credit, while revealing that South African consumers in general are not particularly loyal to their credit providers,” Hatea said. “To build loyalty and retain younger consumers, lenders should invest in early-stage experiences, personalised engagement, and relevant products that build lasting relationships.”

Myth 5: Younger consumes struggle to keep up with their payment obligations

Interestingly, younger consumers show significantly lower risk of delinquency at 30 days past due (DPD) in the first year after opening credit cards, although this rises as they get older: there was a 17% delinquency rate among near prime 18 to 22 year olds, while 30 year olds displayed a 24% delinquency rate.

However, for non-bank loans and bank loans, younger consumers (18 to 24 years old) show slightly higher delinquency rates than older consumers, although younger consumers, especially those aged 23 to 25, perform better than the industry average. This indicates that lender type influences delinquency outcomes, and that younger borrowers may respond differently to the structure, support, or perception of a lender’s credit.

“Younger consumers are effectively managing their loans when compared to industry averages across most products,” said Hatea. “They’re not broadly higher risk, but they may be more vulnerable in certain lending contexts, particularly non-bank personal loans, where product design, support, or affordability may not be well aligned to their needs. Higher delinquency rates on non-bank personal loans can be addressed through early default detection tools.

“By focusing on education, wallet growth, loyalty, alternative data to measure risk, and proactive risk management, lenders can support younger consumers and drive long-term, sustainable growth among these consumers and in the broader credit market,” she said. “Well-managed credit can also be a catalyst for broader economic growth in South Africa.”

^{[1] TransUnion South Africa conducted a focused study to test lenders’ perceptions of consumers aged 18 to 30, analysing participation, engagement and repayment behaviour among the country’s credit-active population in this age group. Data was studied across four time frames (September in 2018, 2022, 2023 and 2024), and included age, risk score, open products in wallet, credit lines, average balances by product and credit utilisation at commencement of the study, new products opened, line assignments and opening loan amounts for six months, and delinquency rates on newly opened products for 12 months. These were compared to overall market averages to evaluate gaps and opportunities.}

^{[2] According to TransUnion’s Q2 2025 Consumer Pulse Survey of 922 adults aged 18 or older, residing in South Africa conducted May 5–25, 2025 by TransUnion in partnership with third-party research provider, Dynata.}

South Africans are managing cost-of-living challenges with a blend of resilience and caution, according to TransUnion’s Q3 2025 Consumer Pulse Study*. The findings reveal that while inflation and affordability remain top concerns, many consumers are maintaining financial optimism while adopting protective behaviours, especially in credit usage and cyber security.

“South Africans are signalling confidence, but it’s a confidence shaped by awareness of risk,” said Ayesha Hatea, director of research and consulting at TransUnion. “Consumers are balancing optimism with caution, adjusting spending habits, making informed credit decisions, and staying vigilant to fraud.”

Financial Confidence, but Rising Costs

Nearly seven in 10 (68%) of South Africans are optimistic about their household finances over the next year, while 75% expect their income to increase during that period. However, this optimism exists alongside strain: 36% of consumers say they expect to be unable to pay at least one of their current bills or loans in full. South Africans were concerned about the impacts of price increases, most particularly for groceries (82%), utilities (60%), fuel for cars (52%) and medical care (52%).

Younger Generations Shape Credit Behaviour

Generational differences continue to define financial habits. Nearly half of Gen Z (18-28 years old, 48%) and Millennials (29-44 years old, 43%) reported they’ll apply for new credit or refinance existing credit in the next year, compared to far lower intent among Gen X (45-60 years old) and Baby Boomers (61-79 years old).

Younger consumers are also driving the adoption of buy now, pay later (BNPL) services with 55% and 59% of Gen Z and Millennials saying they’ve used BNPL in the last 12 months compared to 39% and 19% of Gen X and Baby Boomers, respectively. Overall, 15% of South Africans who have used BNPL in the last year said they did so to afford a larger purchase (furniture, appliances or cars), highlighting both its appeal and potential risks in a high-inflation environment.

Cautious Credit Intent Amid Affordability Pressures

While the vast majority of South Africans (93%) say that access to credit and lending products is important to be able to achieve their financial goals, many remain hesitant to take on new financial products. In fact, 38% said they’ll apply for new credit or refinance existing credit in the next year. Credit awareness among South African consumers remains strong, with 70% agreeing that access to credit can unlock new opportunities and improve quality of life.

This sentiment aligns closely with TransUnion’s financial inclusion priorities, particularly as alternative data becomes a more prominent tool in assessing creditworthiness. The study reveals that consumers are increasingly aware of how credit affects their daily lives, which highlights the importance of expanding access to credit through inclusive data strategies, especially for those traditionally excluded from formal financial systems.

Among those planning to apply for new or refinance existing credit in the next year, unsecured credit products such as personal loans (30%), new credit cards (29%) and BNPL services (22%) are the most popular credit types they said they’ll apply for. In contrast, a lower percentage said they’ll apply for secured credit options like a new car loan or lease (18%) or home loans (16%), highlighting a cautious approach to larger, long-term borrowing.

Nearly Two-Thirds Report Being Targeted with Fraud

Fraud attempts and scams remained high in Q3: 59% of South Africans said they were targeted by email, online, phone call or text messaging fraud in the last three months, the same percentage as Q2. Among those who said they were targeted, the most reported scheme was money/gift card scams (37%), with phishing (28%) and smishing (28%) also widespread.

With the persistence of attacks, consumers are proactively taking action. In fact, 54% of all surveyed said they changed passwords, 35% checked their credit report for any signs of fraudulent activity against their profile, and 27% modified their login to secure login without passwords options or added multi-factor authentication in the last 60 days in response to cyber security concerns.

“Fraudsters are evolving, and consumers are trying to keep pace,” said Hatea. “This is why education and accessible protection tools are so critical in building long-term trust in digital engagement.”

Consumers can get their free annual credit report from TransUnion here.

* TransUnion’s online survey of 966 South African adults was conducted June 17– 31, 2025.

South Africans responded to a more favourable interest rate environment during Q2 2025, leading to increased new account originations across most consumer credit products, particularly for credit cards and vehicle finance. Home loan activity also showed signs of recovery, as consumers felt more confident in committing to longer-term credit obligations. Retail revolving loans were the exception, with origination volumes declining despite growth in balances.

These are some of the findings of TransUnion’s Q2 2025 South Africa Industry Insights Report, which also found that South Africans were managing their credit better, as delinquencies improved across most consumer credit products during the quarter.

Credit Card Market Continued Upward Trajectory

Credit card originations increased by a robust 36.5% year-over-year (YoY), underscoring this product’s relevance as a flexible financial tool for consumers seeking convenience and/or liquidity in what remains a challenging economic environment. Millennials (born 1980 to 1994) drove this growth, with originations in this cohort making up 47.6% of all originations in the period.

Lenders seeking to expand market share continued to extend credit to consumers in higher-risk prime and below risk tiers^[1], with originations to subprime consumers increased by 49.2% YoY. They balanced this growth among higher-risk borrowers with smaller credit limits. The average credit limit on new credit cards decreased by 19.5% YoY during the quarter.

Delinquency trends showed mixed results. Credit card balance-level delinquency rose slightly to 18.1%, up 13 basis points (bps) YoY, indicating a marginal increase in overdue balances. In contrast, account-level delinquency rates declined by 32 bps YoY to 12.1%. This decline in account-level delinquency suggests that while some consumers accumulated larger balances, many were able to make payments to keep their accounts active.

“The latest credit cards trends reflect strategic credit use and disciplined repayment behaviour among a financially stretched borrower base,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “The combination of rising origination volumes and shrinking new credit lines suggests that lenders are working to balance growth with prudent risk management. Lenders may need to refine their segmentation strategies, enhance early warning systems, and tailor credit line management to sustain portfolio health while supporting customers’ financial needs.”

Vehicle Asset Finance Shows Continued Growth

Vehicle asset finance originations increased by 21.0% YoY in Q2 2025, and average new loan amounts increased by 3.5% while the number of active accounts increased by 2.1% YoY. Growth was mainly driven by Gen Z (aged 18 to 28) and Millennial (aged 29 to 44) consumers who accounted for 64.3% of originations.

Outstanding balances grew by 7.6% YoY, and average balances have increased by more than 30% over the last five years, reflecting both higher vehicle prices and a sustained trend toward longer loan terms, which slows loan balance paydown rates. Loan terms granted during Q2 2025 averaged 74 months, up from 73 months in Q2 2024 and 72 months in Q2 2023. Longer loan terms, while slowing balance paydown, result in lower monthly payment amounts, which help consumers manage monthly cash flow in a high-cost environment.

Younger consumers are beginning to look for more ways to enter the vehicle market, including taking advantage of more cost-effective imported vehicles. However, 65% of vehicle finance originations were made by repeat buyers during Q2 2025, suggesting that access to vehicle finance remains limited for new entrants. At the same time, lenders need to be mindful of rising risk levels: in the second quarter of 2025, 44% of new-to-vehicle finance consumers fell into the subprime risk tier. These trends highlight the need for lenders to design credit products that support younger buyers, while ensuring responsible credit practices are upheld.

Account-level delinquencies for vehicle asset finance improved by 24 bps YoY to 5.1%, demonstrating that repayment behaviour for this product remained relatively stable, and that the overall risk profile of this portfolio is improving.

“For vehicle finance lenders, the rise in originations alongside modest growth in loan amounts suggests an opportunity to support demand while maintaining portfolio discipline,” said Hatea. “The improvement in delinquency rates is encouraging, but ongoing monitoring will be essential as economic recovery remains uneven. Vehicle finance lenders may benefit from refining pricing models, reassessing vehicle segmentation strategies, and balancing growth with prudent risk management.”

Home Loan Market Responds Positively to Eased Interest Rates

Lower interest rates, moderating inflation and improved real wage growth led to stronger consumer sentiment, giving lenders an opportunity to re-engage with consumers seeking home loans. New home loan account originations increased by 6.8% YoY during Q2 2025, showing early signs of recovery after declines in growth over previous quarters.

Favourable interest rate conditions and enhanced credit access drove broader access to home ownership this quarter, with 51% of home loans granted to individuals taking a home loan for the first time — the highest proportion in over five years. Among these, 56% were Millennials and 24% were Gen Z.

Delinquency trends showed mild deterioration, with the account-level delinquency rate increased by 29 bps to 7.5%. These movements suggest that while the market is stabilising, repayment stress remains a concern.

“These trends indicate a home loan market that is stabilising, but not without risk,” said Hatea. “For home loan lenders, the uptick in originations presents an opportunity to re-engage with the market, but rising delinquency rates underscore the need for vigilance. Portfolio strategies may need to shift toward enhanced consumer profile assessments, proactive risk monitoring, and targeted engagement with borrowers showing early signs of strain. As the market navigates this transitional phase, balancing growth with resilience will be key.”

 Table 1: Key South African Credit Market Metrics (Q2 2025 vs Q2 2024)

 *Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears

^[1] Scores are based on TransUnion’s CreditVision® generic scoring methodology. Risk distribution key: subprime (0-625), near prime (626-655), prime (656-695), prime plus (696-720), super prime (721-999).

TransUnion’s latest Mobility Insights Report shows South Africa’s automotive market building momentum in 2025, supported by a favourable interest rate environment, record-low new-vehicle inflation, and liquidity from the two-pot pension reform. While recovery is underway, the outlook remains fragile, with affordability constraints and export headwinds threatening longer-term growth.

Supportive Shifts, But Growth Remains Fragile

The South African Reserve Bank has cut interest rates five times since September 2024 and inflation has returned to the lower end of the 3-6% band¹, providing households with some relief. Consumer confidence has improved among middle- and higher-income groups, although low-income consumers continue to face pressure from food and electricity costs².

“These macro shifts provide short-term support to the vehicle market, but momentum is likely to taper in 2026 without further reforms,” said Lee Naik, CEO of TransUnion Africa.

Affordability And Value Drive a Surge

Passenger car sales broke through the 35,000-unit ceiling for the first time in years, with July and August 2025 marking the strongest volumes since 2014. According to Naamsa, new passenger car sales grew 22.5% year-over-year (YoY) in Q2, fuelled by lower borrowing costs, aggressive OEM incentives and the entry of new value-focused brands.

Chinese automakers continued their rapid growth, expanding market share from 3.1% in 2022 to nearly 15% in Q2 2025. Their affordable, tech-rich SUVs and expanding dealer networks are reshaping competition, forcing legacy OEMs to rethink pricing, features, and model cycles. Toyota retained overall leadership, with Suzuki securing second place for the second consecutive quarter.

“Improved affordability, aggressive incentives and growing demand for value brands, alongside modest support from two-pot withdrawals, helped sustain momentum through 2025. However, as interest rates remain elevated and credit conditions tighten, and the two-pot effect normalises, growth is expected to moderate in 2026, with export risks and rand volatility adding uncertainty,” said Naik.

Diverging Trends: New vs. Used Vehicle Demand

NaTIS data shows new registrations rising 20% YoY in Q2 2025, led by Northern Cape, Free State and Northwest. In contrast, used registrations declined by 1.4%, reflecting pressure in that segment.

Across all vehicle sales, the Used-to-New Vehicle Registration Ratio rose to 3.2 in Q2, up from 2.5 in Q1, indicating a quarter-on-quarter increase in the relative share of used vehicle registrations. However, this remains below the 3.8 ratio seen through much of 2024, suggesting that new vehicles have regained some ground YoY. While used vehicles continue to dominate overall registrations, the market has shifted slightly back toward new vehicles compared to last year. This nuanced divergence presents opportunities for OEMs and dealer networks, while independent used dealers continue to face headwinds.

Exports Slump Amid Global Shocks

While domestic momentum improves, passenger vehicle exports fell 24.6% in Q2 2025 due to softer global demand and new US tariffs of up to 30%. Premium models, heavily reliant on the US and European markets, are under pressure, raising concerns for production, jobs, and investment.

Two-pot Withdrawals: Targeted Liquidity with Visible Impact

The September 2024 two-pot retirement reform injected liquidity into households, with evidence from the Bureau of Market Research suggesting a direct impact on mobility demand³, particularly in the used car market. While withdrawals were generally insufficient to fund deposits for new vehicles, they provided meaningful support to affordability-driven used vehicle purchases.

The reform is offering short-term relief rather than long-term wealth extraction, with withdrawals largely used for deposits, consumption, or debt repayment. Generational differences are evident: Millennials (aged 29 to 44) and younger Gen X (aged 18 to 28) are the most active claimants, while Baby Boomers withdraw minimally. Repeat withdrawals are becoming more common, suggesting both ongoing financial strain and the emergence of a recurring source of liquidity for entry-level and mid-market segments⁴.

“Two-pot withdrawals were not the only factor lifting sales,” noted Naik. “But the timing, scale and claimant profile suggest they acted as a meaningful catalyst for incremental used-car purchases.”

What Industry Players Should Do Next

Looking ahead, TransUnion advises that OEMs, dealers and lenders recalibrate strategies to balance domestic opportunities with external risks. Industry participants should align campaigns with liquidity cycles, planning promotions and stock availability around expected two-pot withdrawal windows.

Affordability must remain the priority, with a sharpened focus on value brands, certified pre-owned vehicles, and models that deliver a strong total cost of ownership. Financing solutions should also evolve, offering deposit support, trade-in boosters, and more flexible terms, while carefully monitoring repayment behaviour to manage post-purchase risk.

At the same time, leveraging data-driven insights, integrating credit and registration analytics to identify liquidity-sensitive buyers, preapprove customers, and track repayment performance, will be critical for sustaining growth in an uncertain environment.

“South Africa’s auto market is regaining momentum, but it’s a fragile recovery,” said Naik. “Those who time offers to policy-driven liquidity, sharpen affordability, and manage risk proactively will be best placed to capture growth.”

Read the full TransUnion South Africa Mobility Insights Report here.

ENDS

Notes to Editors: The Q2 2025 release is the second edition of the TransUnion South Africa Mobility Insights Report, formerly known as the Vehicle Pricing Index. The rebranded report now captures broader consumer, financing, and insurance insights across the mobility ecosystem.

Sources:

^{1 South African Reserve Bank (SARB)}

^{2 TransUnion-South-Africa-CCI-Report-H2-2025-V9.pdf}

^{3 Two-pot-claims-and-credit-data-FINAL.pdf}

^{4 FAnews: Majority of two-pot withdrawals in the new tax year are repeat withdrawals; Moneyweb: Two-pot withdrawal: repeat claims surge; and Moneyweb, Two-pot payouts surge to R57B, with 4m withdrawals to date.}

The best way to confirm or ‘bust’ industry myths is to test them through experiments and data analysis to reveal the truth – and that’s exactly what TransUnion South Africa did with data it holds in the short-term insurance sector.

“South African consumers remain under pressure despite recent interest rate cuts, making this an opportune moment for insurers to rethink their customer acquisition and retention strategies – and to challenge the truisms they’ve relied on in recent years,” said Schalk Fischer, insurance lead at TransUnion South Africa. “To drive better outcomes, insurers must evolve and adapt their strategies to respond to changing market conditions, drawing on risk-management solutions that feature unique data and advanced analytics.”

Myth 1: With stagnant total policy volumes, the only way for an insurer to grow is to win customers from other insurers.

In assessing all new short-term insurance policies taken out between April 2024 and March 2025, TransUnion found that only 17% of new policies were opened by consumers moving to another insurer. Another 37% involved ‘policy splitting’, where consumers moved cover of one of their assets to a new provider, but did not move their whole portfolio.

This means that roughly 54% of new policies are opened due to churn – a significant portion, but certainly not the overwhelming portion that many insurers believe it to be.

“This data shows key growth opportunities for insurers lie among consumers who are new to insurance. In fact, 33% of new policies opened during the time of the study were taken out by consumers who had not had an insurance premium in the previous 24 months,” Fischer said. “While the short-term industry will always be very competitive, there are growth opportunities outside of working aggressively to attract customers from other insurers.”

Myth 2: Loyalty in short-term insurance is dead. Price is the primary variable.

With many consumers scrambling for cost savings, price is perceived to be the most important differentiator between insurers, along with being seen as the main reason that consumers leave one insurer for another.

TransUnion’s analysis showed that 13% of insured consumers who cancel their insurance eventually return to their original insurance provider over time, without switching to another insurer in the interim.

This brand loyalty is fairly consistent between different distribution channels: 9% for banks’ insurance offerings, 11% for brokers, and 14% for direct insurers.

“These findings highlight that, while insurance pricing is certainly a leading consideration among consumers, it is evident that brand loyalty is still a driving factor,” Fischer said. “Marketing and acquisition strategies clearly focus on price, but there’s a greater than expected opportunity to build loyalty that will either retain customers or encourage them to return to brands they have trusted before.”

Myth 3: The new-to-insurance segment is small and only includes risky younger consumers.

TransUnion’s analysis revealed that one in three (33%) consumers who took out policies between April 2024 and March 2025 were new to insurance – they did not have short-term insurance payments linked to their identity number in the previous 24 months.

However, this doesn’t necessarily mean that all newly insured consumers were uninsured before. Some may have previously been covered under their partner or spouse, and later separated their insurance portfolios, or they could have been young adults who sought their own cover after being included in their parents’ policies.

“These findings show that insurers need to expand the scope of how they segment their target audiences, as new-to-insurance consumers are not always who they’re perceived to be,” Fischer adds.

The analysis revealed additional insights into consumers taking out a policy for the first time. Only 6% were aged 18 to 24 years – perceived to be the riskiest consumers – while the greatest portion of these consumers (36%) were aged 25 to 35 years, followed by 36 to 45 year olds, who took out 25% of new policies. It’s clear, then, that consumers aged 25 to 45 present the greatest opportunity for insurers.

In overlaying loyalty data with these findings, it emerged that only 1% of 18 to 24 year olds shopped around for a better deal once they were granted cover, while less than a quarter (24%) of 25 to 35 year olds shopped around. However, consumers aged 36 to 45 showed the greatest propensity to shop around for a better deal, with 29% taking on that challenge.

The myth is officially busted: opportunities for growth lie well beyond young consumers who have only just reached eligibility to apply for their own short-term insurance policies.

“While the short-term insurance market is perhaps not growing at the rate that many insurers would like, our analysis shows that it’s far from stagnant. Clear segmentation along with careful risk management and profitability assessments can help providers acquire lower-risk, higher-value customers across diverse groups of potential customers,” Fischer said. “While price remains a significant driver among consumers, other variables continue to play a meaningful role in building customer loyalty.”

Encouragingly, 31% of consumers are paying down debt faster, 24% are boosting emergency savings, and 37% plan to increase their retirement or investment contributions. These trends suggest that South Africans are not only reacting to pressure, but they are also taking proactive steps to protect their financial futures.

Ayesha Hatea, director of research and consulting at TransUnion South Africa shares some tips and tricks to help you manage debt and interest rates more effectively in 2025:

1. Pay Off High-Interest Debt First

The study highlights that more consumers are accelerating debt repayment and for good reason. Credit cards and personal loans often carry the highest interest rates when looking at consumers with multiple products in their wallet.

“In a high-interest environment, every rand you pay off today saves you from paying more interest tomorrow,” says Hatea

Tip: List your debts and focus on paying off the ones with the highest rates first, while keeping up with minimum payments on the rest.

2. Be Strategic About Borrowing

Access to credit remains crucial. 92% of South Africans believe it’s important for achieving their goals. Yet only 36% intend to apply for credit in the next year, reflecting caution amid high borrowing costs and income uncertainty.

If you do borrow, make it purposeful. The study found that demand is strongest for credit cards (30%), personal loans (28%), and Buy Now, Pay Later services (25%) but remember, these are all unsecured products that can quickly become costly if not managed well.

Tip: Compare interest rates, fees, and repayment terms before taking on new credit. Avoid unnecessary borrowing for short-term wants when rates are high or if you aren’t sure you’ll be able to make the necessary repayments.

3. Build a Safety Net, Even Small Steps Count

Nearly one in four consumers (24%) increased contributions to emergency savings or stokvels in Q2. In addition, 37% plan to grow their retirement or investment savings in the coming months.

Tip: Start with a modest, consistent contribution to an emergency fund, even R200 a month can create a buffer that reduces reliance on credit when life throws curveballs.

4. Strengthen Your Financial Awareness

The study shows that 70% of South Africans check their credit reports at least quarterly, with Gen Z and Millennials leading the way. Those who actively monitor their credit tend to feel more confident and have a better understanding of their overall financial commitments.

Tip: Check your credit report regularly, track your score, and make sure all information is accurate. Awareness is power when it comes to negotiating better credit terms.

5. Protect Yourself Against Digital Fraud

Fraud remains a real risk with 58% of South Africans saying they were targeted by scams in Q2, and 13% fell victim. Younger generations are more likely to adopt safeguards like multi-factor authentication, but 21% of consumers took no action at all.

Tip: Use strong, unique passwords, enable two-factor authentication, and monitor your accounts for unusual activity. Protecting your identity is just as important as protecting your money.

The Bottom Line

The TransUnion Consumer Pulse Study shows that while many households remain under pressure, South Africans are becoming more selective in how they spend, strategic in how they borrow, and vigilant in how they protect themselves.

“Resilience comes from balance: focus on responsible spending and borrowing, reduce costly or unsustainable debt, and build savings to protect against future shocks,” Ayesha concludes.

By taking small, deliberate steps today, households can better manage debt and interest rate uncertainty and build financial stability for tomorrow.

In a country known for both its beauty and inequality, where access to formal credit remains out of reach for many, ‘Be the Reason Things Change’ seeks to break down the barriers that keep people excluded, by focusing on consumer education, innovation, and community engagement. The campaign is designed to help South Africans take control of their financial futures, regardless of who they are or where they come from, whilst also advocating for businesses to embrace alternative data and innovative scoring solutions to see and serve the unseen. By doing so, they too can empower the disempowered, expanding access and inclusion, and enabling more people to participate meaningfully in the financial ecosystem and live the lives they deserve.

“At TransUnion, we believe in a world where the impossible becomes possible, where the unseen are finally seen, and where every South African deserves the opportunity to participate fully in the economy,” says Lee Naik, CEO TransUnion Africa.

’Be the Reason Things Change’ is more than a campaign slogan; it’s a call to action to take part in building a more inclusive financial system. Through innovative data solutions and consumer education, we aim to spark a national conversation about breaking down barriers in the credit landscape and ensuring financial empowerment is accessible to all. Ultimately, we want more South Africans to be included in the formal financial economy, empowering them to understand how access to credit can transform their lives and enable them to uplift their communities,” says Naik.

Addressing South Africa’s Financial Inclusion Challenge

Many South Africans continue to face obstacles in accessing formal credit and quality financial services. Traditional systems often feel exclusive or out of reach, especially for underserved individuals and small businesses, because they rely heavily on past borrowing behaviour as the primary measure of creditworthiness. According to TransUnion’s CreditVision^® Telco Data Score data-modelling, over 1.4 million credit-invisible South Africans open new credit accounts each year, contributing to more than four million new accounts over the past three years*. Yet traditional scoring models frequently fail to assess these consumers accurately, leaving over 16 million adults outside the formal credit system. Successfully integrating these and other excluded consumers into the economy could contribute an estimated R173 billion to South Africa’s GDP.

A significant portion, approximately 35% of new-to-credit consumers are under the age of 25, many entering the workforce for the first time and using credit to cover essentials such as work clothing. This highlights the urgent need for innovative, inclusive tools that better reflect the realities of younger, digitally active individuals who may lack a conventional credit footprint.

TransUnion is shifting the paradigm by embracing alternative data, creating new scoring capabilities, and ensuring that individuals who were once unclassifiable can now be assessed fairly and accurately. Its “Be the Reason Things Change” campaign responds to this need by equipping the public with practical tools, credit education, and the confidence to take charge of their financial futures.

Collaborative Effort with Global Partners

The campaign is supported by the International Finance Corporation (IFC), the private sector arm of the World Bank Group, has played a key role as a technical advisor and promotor of credit information tools in South Africa, reinforcing the global imperative to expand equitable access to financial services.

“We are proud to support TransUnion’s ‘Be the Reason Things Change’ campaign, which aligns closely with our mission to advance inclusive economic development,” says Cláudia Conceição, IFC Regional Director for Southern Africa. “By removing barriers to credit access, this initiative empowers individuals and communities to build financial resilience and unlock economic opportunity, key pillars of long-term social impact.”

This collaboration highlights the value of cross-sector partnerships in tackling systemic financial exclusion, combining local insights with global best practices to deliver scalable solutions.

Empowering Through Education, Innovation, Investment and Africa Firsts

‘Be the Reason Things Change’ will see TransUnion roll out a fully integrated marketing campaign designed to demystify the credit system and empower people from all walks of life. Key pillars of the campaign include:

• A first-ever interactive peelable billboard in Africa, installed at Melrose Arch, located by the entrance off Corlett Drive in Johannesburg. 
• A first-ever digital billboard aimed at reaching audiences beyond the Johannesburg area.
• Transformational stories from campaign ambassadors include Springbok rugby stars Makazole Mapimpi and Lukhanyo Am, as well as fashion entrepreneur Tshepo Mohlala
• Springbok, Lukhanyo Am and fashion entrepreneur, Tshepo Mohlala will be launching the campaign at Melrose Arch on 21 August 2025 where they will peel the first layers of the billboard and share their own personal journeys.
• Over R10m valued in sponsorship and investment in e-learning credit courses for over 5,000 South Africans.
• Practical education: Simple, clear resources to help people understand credit scores, manage debt, and make informed financial choices.
• A unique AI-powered digital film piece.
• Innovative Solutions: New offerings to help enable lenders to see consumers previously unseen, empowering consumers to access new credit opportunities

‘Be the Reason Things Change’ is about rewriting the story around credit and creditworthiness,” says Naik. “We want every South African to understand how credit works, what their score means, and how they can maintain and improve it. More importantly, we want them to believe they can be the reason things change.”

Campaign Execution Partners

The campaign was brought to life through a dynamic collaboration with creative agency 1 Over One, who led the conceptual development; local production partner Run Jump Fly, who delivered a unique AI-powered digital film piece, FleishmanHillard South Africa and Capacity Relations who provided strategic PR, media and activation support to amplify the message and ensure meaningful engagement across key audiences.

Join the Movement

TransUnion invites all South Africans to join the movement for financial inclusion. To learn more, participate in the campaign, and access educational resources, visit www.transunion.co.za/bethereason.

Consumers can get their free annual credit report from TransUnion here.

^{* The three-year period refers to an analysis of the TransUnion Credit Bureau database over the period for January 2022 – December 2025.}

Global information and insights company TransUnion Africa has launched its API Marketplace, a streamlined digital platform designed to give small, medium, and micro enterprises (SMMEs) as well as FinTechs direct, self-service access to a wide range of credit, identity and fraud prevention solutions. The platform aims to simplify integration, strengthen risk assessment, and support the delivery of faster, more personalised financial services across the country. The API Marketplace helps reduce technical complexities, enabling companies to quickly incorporate credit checks, identity verification, and fraud detection into their operations for faster, more accurate decision-making.

Simplifying Access to Trusted Data Solutions

For many SMMEs and FinTechs, limited access to reliable credit data, time-consuming verification processes, and the burden of manual fraud checks can slow growth and undermine customer trust. The TransUnion API Marketplace addresses these pain points by allowing businesses to discover and embed TransUnion’s trusted data solutions directly into their systems, without lengthy onboarding processes or complex development cycles.

“With the launch of the TransUnion API Marketplace in South Africa, we’re empowering SMMEs and FinTechs with the tools they need to thrive in the digital economy,” says Dee Chetty, Chief Product Officer at TransUnion Africa. “It’s about lowering barriers to entry for businesses aiming to innovate quickly, deliver inclusive financial services, and make smarter decisions, while upholding the highest standards of data integrity and security.”

The platform offers real-time access to insights that support key business functions, from identity verification during customer onboarding to fraud flagging and credit risk assessment throughout the customer lifecycle. This is particularly powerful for SMMEs and FinTechs, which often operate with lean teams and need to maximise efficiency without compromising on due diligence.

Supporting Financial Inclusion and Economic Growth

According to the latest Mastercard SME Confidence Index, 90% of South African SMMEs have adopted digital payments in recent years, demonstrating the sector’s appetite for modernisation. However, many still lack access to the kind of scalable, reliable infrastructure that larger organisations take for granted. The API Marketplace bridges that gap, enabling smaller firms to leverage TransUnion’s capabilities in a cost-effective and agile way.

Crucially, the offering also supports national priorities around financial inclusion. Improving the flow of accurate credit and identity data enables businesses to offer more tailored products to underserved consumers, particularly in emerging markets and low-income communities. This helps create a more transparent and equitable financial ecosystem, where access to funding and services is based on real, data-driven insights.

“The API Marketplace is not just a product, it’s an enabler of impact,” adds Chetty. “We know that the future of inclusive finance in South Africa depends on access: to data, to tools, and to trust. This platform delivers on all three, helping more businesses deliver safe, responsible, and responsive financial products.”

Developer-Friendly Design for Rapid Deployment

Digitising integration through the API Marketplace enhances operational efficiency and significantly shortens development timelines. The platform includes a wide range of features designed for accessibility and ease of use. It offers a searchable API catalogue, developer-friendly documentation, and robust security protocols, all designed to reduce friction and accelerate deployment. A structured onboarding process is already in place, with plans to introduce full self-service and digital onboarding in the next phase of development.

Looking ahead, TransUnion sees the API Marketplace as a critical lever for economic resilience and innovation, particularly as the South African FinTech sector continues its rapid growth. The local FinTech market is projected to reach USD 14.86 billion by 2033, with APIs playing a foundational role in scaling new financial solutions.

Visit TransUnion’s API Marketplace for more information.

South African consumers are responding to ongoing financial pressures with increasing intent and vigilance. While inflation, high interest rates and job market uncertainty continue to weigh on household budgets, the latest TransUnion Consumer Pulse Study for Q2 2025* reveals a population adjusting not just defensively, but proactively. From rethinking spending and saving to becoming more discerning about credit and fraud, South Africans are adopting behaviours that suggest a shift toward long-term financial resilience, especially among younger generations.

“South Africans are showing resilience with purpose,” said Ayesha Hatea, director of research and consulting at TransUnion. “They’re not simply reacting to pressure, they’re taking charge, rebalancing their finances and protecting their future.”

Mixed Incomes, Bold Adjustments

While there are some positive signs, many households are still experiencing fluctuations in their income. In the second quarter, 21% of consumers said their household income had decreased, while 38% reported an increase. A majority of respondents (75%) are hopeful that their earnings will increase in the next year. However, this confidence exists alongside financial challenges, with nearly 39% of consumers reporting that they expect they might miss at least one bill or loan payment in the near future.

This financial pressure is driving noticeable changes in how people manage their money. More than half of consumers (54%) trimmed back on non-essential expenses like dining out, entertainment and travel. Many are also taking steps to strengthen their financial security; 31% paid down debt faster, 24% put more into emergency savings or stokvels and 37% planned to increase their retirement or investment savings.

Generational Differences Define the Shift

While overall behaviours are trending positive, the evolution is not uniform across age groups. Younger consumers, particularly Gen Z (ages 18-28) and Millennials (29-44) are emerging as drivers of this transformation. They are more likely to apply for credit, monitor their credit reports frequently and adopt security tools like multi-factor authentication.

Forty-five percent of Gen Z respondents and 39% of Millennials indicated they plan to apply for or refinance credit in the next year, compared to just 27% of Gen X (45-60) and 15% of Baby Boomers (61+). They are also the most engaged in monitoring their credit monthly and believe that access to alternative data, such as rental or Buy Now Pay Later (BNPL) payment histories, would improve their credit scores.

“Younger South Africans are embracing financial tools with growing confidence,” Hatea added. “They’re more comfortable with digital platforms, increasingly aware of how their financial choices affect their long-term goals, and, as a result, are more proactive about managing their credit.”

Cautious Credit Intent Amid Access Concerns

While 92% of consumers believe access to credit is important to achieving their financial goals, only 36% intend to apply for credit in the coming year, a figure that has remained stable since Q1. This cautious demand reflects continued uncertainty around employment, income and affordability.

Consumers favour unsecured lending, with credit cards (30%), personal loans (28%) and BNPL services (25%) attracting the most interest. Interest in secured lending remains comparatively low, with only 22% planning to apply for vehicle finance and 19% expressing interest in home loans.

Still, barriers remain. Nearly half (48%) of consumers said they had considered applying for credit but ultimately decided not to. The main reasons were income/ employment status (30%), high borrowing costs (29%) and concerns about their credit history (27%). Overall, 45% of consumers believed they would be approved if they applied for credit. While this figure reflects general sentiment, optimism tends to be higher among those who actively monitor their credit, suggesting a link between financial awareness and confidence.

Digital Fraud on the Rise, but So Is Awareness

As digital engagement grows, so does the threat of fraud. In Q2 2025, 58% of South Africans reported being targeted by fraud schemes, a decrease from the previous quarter (61%) with 13% confirming they had fallen victim. The most common scams included gift card or money transfer scams (33%), phishing (31%), smishing (30%) and third-party seller scams (28%).

Consumers are responding with heightened vigilance in response to cyber security concerns. A majority (59%) changed their passwords, 39% checked their credit reports and 25% added multi-factor authentication. Gen Z and Millennials were the most likely to take protective action, a likely result of both their greater exposure to digital platforms and higher awareness of evolving scam tactics. Alarmingly, 21% of consumers said they took no action at all, often citing uncertainty about what to do. This highlights the ongoing need for stronger cybersecurity and fraud education, and accessible protection tools.

“Consumers are trying to keep pace, but the threat landscape is evolving quickly,” said Hatea. “What we need now is a national conversation, one that gives all South Africans the knowledge and resources to protect their identities in a digital-first world.”

A Financial Turning Point

The Q2 2025 Consumer Pulse Study reveals a country making deliberate financial choices in the face of uncertainty. South Africans are shifting from survival mode to a more balanced, future-focused financial mindset. While challenges remain, the direction is clear; consumers are becoming more selective in how they spend, more strategic in how they borrow and more vigilant in how they protect themselves.

“At TransUnion, we believe these shifts represent not just resilience, but growth,” concluded Hatea. “South Africans are taking ownership of their financial journeys and in doing so, they’re laying the groundwork for lasting stability and inclusion.”

Consumers can get their free annual credit report from TransUnion here.

^{* This online survey of 922 adults was conducted May 5–25, 2025}

TransUnion today announced a minority investment and broader strategic partnership with Omnisient, a South Africa-founded FinTech operating internationally that offers a privacy-preserving data collaboration and advanced analytics platform. The Omnisient platform empowers businesses to safely access high-value consumer data ecosystems and rapidly integrate alternative data sets to drive intelligent decision-making. As part of the investment, a TransUnion representative will join Omnisient’s board of directors.

“The Omnisient platform allows multiple clients to use built-in advanced analytical tools to simultaneously evaluate the utility of diverse data sets, identifying those that deliver measurable value. Through this collaboration, TransUnion expects to gain access to a broader range of alternative data sources and privacy preservation capabilities. By accelerating the integration of high-impact data into our ecosystem, we intend to enhance existing solutions and develop new, market-relevant products that better meet the evolving needs of our customers,” said Lee Naik, Regional President/ CEO of TransUnion Africa. 

“Traditional data models often fail to reflect the lived realities of African consumers, leaving millions without access to credit and the opportunities it enables,” said Naik. “Financial inclusion is central to unlocking economic growth across the continent. That’s why we’re committed to leading with bold, African-born solutions designed to see the unseen and serve the credit invisible by integrating alternative data sets alongside traditional credit data in ways that reflect uniquely African contexts and realities. By incorporating non-traditional indicators of financial behaviour, this approach broadens access to credit and helps us reach more underserved communities. We believe accelerating the adoption of alternative data is critical to closing the credit gap at scale, enabling faster, fairer and more inclusive access to financial services for millions across the continent."

“Our privacy-preserving data collaboration platform brings financial services and consumer brands together, allowing them to discover, validate and commercialise new alternative sources of consumer behavioural and transactional data without having to exchange sensitive personal information,” said Jon Jacobson, co-founder and group CEO of Omnisient. “This data allows financial institutions to make better risk decisions with more confidence and security, unlocking the potential to grow financial inclusion for hundreds of millions of people around the world.”

This collaboration marks a natural progression in TransUnion’s strategy to expand financial inclusion across Africa. By leveraging privacy-enabled alternative data sets through Omnisient’s platform, TransUnion intends to strengthen its ability to help address the challenge of bringing an estimated 500 million* financially excluded Africans into the formal financial ecosystem. By responsibly harnessing alternative data at scale, TransUnion sees the opportunity to bring millions of new-to-credit and credit-underserved consumers across Africa into the financial mainstream. This enables individuals to begin building a credit profile, many for the first time, laying the foundation for long-term economic empowerment. It’s a powerful demonstration of TransUnion’s commitment to using Information for Good^® to drive measurable impact at scale: expanding access to credit, unlocking economic potential and reshaping the future of finance across Africa.

Global demand is rising for alternative data solutions that protect privacy, build trust and unlock value. Omnisient’s platform meets this need with technology that enables secure, privacy-preserving data collaboration. Instead of transferring raw data, Omnisient uses tokenised keys to represent personal information in the data set, ensuring privacy is maintained throughout the process. As a leading provider in Africa of secure, many-to-many data connectivity between banks, financial institutions and third-party sources, Omnisient is driving innovation in data collaboration.

^{*Source: The Global Findex Database 2021}

According to TransUnion’s (NYSE:TRU) Q1 2025 South Africa Industry Insights Report, the growth in originations of new credit cards, at 30.7% year-over-year (YoY), far outstripped growth for other consumer credit products during the first quarter of the year.

Strong growth in credit cards was driven, in part, by lenders extending cards to more below prime^[1] borrowers than they did one year ago – up 33.1% YoY. Subprime and near prime borrowers accounted for 69.3% of credit card originations, up from 64.3% one year earlier. At the same time, lenders looked to actively manage the increased risk profile of borrowers by limiting the average credit limit on new credit cards – down 13.1% YoY.

Growth is likely to remain buoyant in the South African credit card market, with 33% of respondents to TransUnion’s recent Q1 2024 Consumer Pulse Survey saying that they planned to apply for a new credit card in the next 12 months.

Credit card average account balances increased by 7.1% YoY, although lenders’ default concerns may have been eased by the 20-basis point (bps) decrease in account-level delinquencies* over the same period, standing at 12.3% in Q1 2025.

“While inflation has dropped to the low end of the South African Reserve Bank’s target range during Q1 at close to 3%, South Africans are still experiencing financial pressures from prior price increases, turning to credit to help them make ends meet,” says Ayesha Hatea, director of research and consulting at TransUnion. “Despite these strains, consumers have increasingly prioritised keeping their credit cards in good standing, as they likely want to ensure access to the ongoing liquidity that this credit product provides.”

Vehicle loans grew at double-digit rate

The vehicle loans market continued to show encouraging signs of continued growth, as origination volumes increased by 11.6% YoY in Q1 2025. The average value of new loans also rose by 3.0% over the same period.

The highest growth rate continued to be among Gen Z^[2] consumers, up 28.5% YoY. Within the Gen Z cohort, 62% of new vehicle loans were opened by consumers in the oldest subgroup in this generation, aged 26 to 29 years. This trend suggests that older Gen Z consumers are becoming increasingly active in the vehicle finance market, likely as they reach key life stages such as career stability and household formation. While this group is not necessarily New-to-Credit, their growing share of originations highlights a valuable opportunity for lenders to engage younger, upwardly mobile consumers.

In contrast, the share of vehicle loans declined across all other generations, with the exception of Gen X, where volumes remained relatively stable. This reinforces the importance of targeting older Gen Z consumers as a key growth segment in the vehicle finance space.

With a 0.25% repo rate cut announced by the South African Reserve Bank (SARB) in January followed by another in May, demand for vehicle loans is likely to remain buoyant, with more than one fifth (22%) of South Africans surveyed in the TransUnion Q1 Consumer Pulse Survey indicating that they intend to take out a new car loan or lease in the next 12 months.

“With vehicle ownership is a priority due to limited public transport offerings, buying a vehicle is often a first step into secured credit for young professionals,” said Hatea. “Vehicle finance often requires relatively small deposits, and flexible financing options can be negotiated to make monthly repayments more affordable. Borrowers don’t need as extensive a credit history to purchase a vehicle as they do to buy a home. Successfully managing a vehicle loan demonstrates financial responsibility, which can strengthen future home loan applications.”

Personal loans leveraged for meeting monthly expenses

During the first quarter of the year, consumers also increasingly turned to personal loans as strategic tools to achieve their financial objectives, with originations growing for both bank and non-bank personal loan lenders – up 2.7% and 11.5% YoY, respectively. Demand for personal loans will likely continue, with 35% of surveyed South Africans saying that they intend to apply for a personal loan in the next 12 months.

However, non-bank lenders may yet have to refocus their risk management strategies in the coming months as more than two in five (41.3%) of South Africans who hold one of these loans – 83.9% of whom are below prime borrowers – being three months or more in arrears during Q1 2025. This is a 520-basis point (bps) YoY increase and is the highest delinquency rate for this product since the previous high of 39.1% in Q2 2021.

The delinquency rate among non-bank personal loans was 15 percentage points higher than delinquencies on bank personal loans, where below prime borrowers comprise 71.8% of the bank personal loans book.

“South Africans are increasingly turning to low-value personal loans with shorter repayment terms to manage their monthly expenses. However, persistently high delinquency rates — particularly among non-bank personal loans — indicate that many consumers are under significant financial pressure and struggling to meet their loan commitments,” says Hatea. “As lenders respond to growing demand for this type of credit, it’s essential they align their growth strategies with prudent risk management to ensure long-term sustainability.”

Home loans remain under pressure

Home loans were the only sector to experience a decline in originations in Q1 2025, down 10.8% YoY. Although originations fell across all risk tiers, loans to prime and above consumers saw a particularly sharp decline, down 21.1% YoY. This continues the downward trend in home loan growth observed since Q1 2020, with exception of a moderate YoY increase between Q1 2022 and Q1 2023.

“The fact that even prime consumers are pulling back from the housing market is a clear signal that affordability remains a significant barrier,” said Hatea. “This trend has implications not only for the credit market, but also for broader economic activity tied to home ownership and property development.”

As the housing finance sector continues to soften, lenders may need to reassess their strategies. This includes rethinking product design and pricing, as well as how they connect with younger consumers and first-time buyers, in order to reignite demand in a segment that has traditionally served as a foundation of secured lending.

 Table 1: Key South African Credit Market Metrics (Q1 2025 vs Q1 2024)

 *Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears

^{[1] Scores are based on TransUnion’s CreditVision® generic scoring methodology. Risk distribution key: subprime (0-625), near prime (626-655), prime (656-695), prime plus (696-720), super prime (721-999).}

^{[2] TransUnion age distribution: Gen Z (Born 1995 – 2010); Millennials (Born 1980-1994); Gen X (Born 1965-1979); Baby Boomers (Born 1946-1964}

TransUnion Africa, in partnership with MTN and Chenosis, has launched CreditVision^® Telco Data Score, a first-of-its-kind credit scoring solution that uses mobile phone call data records to help millions of South Africans with limited or no formal credit history gain access to financial services.

This alternative data scoring model leverages Call Data Records (CDR), which reflect patterns in mobile phone network usage behaviour and correlates it to an individual’s financial behaviour. By using telco data as a proxy for financial reliability, the CreditVision Telco Data Score enables lenders to accurately assess New-to-Credit (NTC) consumers and expand access to safe, affordable credit.

Helping the Financially Excluded

According to TransUnion estimates, over 1.4 million credit-invisible South Africans open new credit accounts each year, contributing to more than four million new accounts over the past three years. Yet traditional scoring models often fail to assess this segment accurately, leaving more than 16 million adults outside the formal credit system.

Approximately 35% of New-to-Credit consumers are under the age of 25, many of whom are new to the workforce and often use credit to buy clothing for work, highlighting the need for innovative tools that support younger, digitally active individuals who may lack a conventional credit footprint. Successfully integrating these and other excluded consumers into the economy could add approximately R173 billion¹ to South Africa's GDP.

“With over 500 million² people across the continent excluded from formal financial systems, the scale of the challenge is undeniable. Traditional data models fail to reflect the realities of African consumers, leaving millions without access to credit and the opportunities it enables. Financial inclusion isn’t just part of our mission, it’s our mandate,” said Lee Naik, CEO of TransUnion Africa. “That’s why we believe the only way forward is to think differently, to lead with bold, African-born solutions. Innovations like CreditVision Telco Data Score, designed for Africa, by Africa, are helping us responsibly harness mobile data at scale. In doing so, we’re not only expanding access to credit, but we’re also unlocking economic potential, accelerating inclusive growth, and reshaping the future of finance across the continent.”

Creating Opportunity with Consent and Compliance

The use of CDR data is subject to explicit consumer consent and is managed in compliance with South Africa’s Protection of Personal Information Act (POPIA). MTN is responsible for consent management and will ensure that Chenosis, MTN’s API marketplace, facilitates the connection between MTN’s data ecosystem and partners like TransUnion in a secure and scalable manner.

“This partnership demonstrates how mobile technology and secure data sharing can support positive change in the financial sector and unlock new opportunities for millions of South Africans,” said Selorm Adadevoh, Group Chief Commercial Officer, MTN Group. “We are committed to ensuring that data is used responsibly, with the customer’s interests at the forefront. This is a model of what responsible innovation can look like.”

Empowering Lenders and Growing the Economy

For lenders, the CreditVision Telco Data Score has demonstrated a 25–35% improvement in predictive performance over previous alternative data models, based on recent pre-launch validations across the retail and banking sectors.

By adopting CreditVision Telco Data Score, lenders can better predict user behaviour and support responsible lending by ensuring that credit users at risk of default are not overexposed and can be effectively supported throughout their credit journey.

Importantly, the product also helps New-to-Credit consumers establish and build their credit footprint over time. According to TransUnion data, low-risk individuals significantly increase their credit exposure within 18 months of becoming credit active, underscoring the long-term benefits of responsible financial inclusion strategies.

“With Chenosis, we enable collaboration between mobile operators and solution providers while maintaining high security and compliance standards,” said Waseem Amra, Head of Products and Platforms, Chenosis. “This partnership highlights how secure data access can support innovation in financial services that can transform lives.”

This partnership between TransUnion Africa, MTN, and Chenosis reflects the growing trend of using diverse data sources to create more accurate and inclusive financial access. Integrating mobile network insights into credit scoring provides a practical and scalable way to reach more individuals, while maintaining high standards of privacy and compliance.

“With this inclusive innovation, TransUnion has taken the lead in creating an impactful solution to one of the continent’s most pressing challenges – finding responsible pathways to greater financial inclusion that will unlock opportunities for individual and national growth. By turning mobile data into meaningful opportunity, we have set the standard in making transformation possible by showing how technology can be used in groundbreaking alternative ways. Together with MTN and Chenosis, we are building a future where every South African, regardless of their financial history, has the chance to be seen, to be trusted, and to thrive,” Naik concluded. “When financial institutions can measure risk more effectively, they can lend more confidently, and more consumers can access opportunity, and that’s a win for everyone.”

_{^{1. Based on TransUnion’s modelling and interpretation of economic market dynamics. 2. Source: The Global Findex Database 2021}}

Sixty-eight percent of South Africans TransUnion surveyed from 21 November to 9 December 2024 indicated that they had been targeted by email, online, phone call or text messaging fraud in the last three months, with 13% saying that they had become victims. Among those who said they were targeted, the most common reported schemes were phishing, where fraudulent emails, websites, social posts or QR codes are meant to steal personal data (33%), smishing where fraudulent text messages try to trick the user into sharing data (31%), and third-party scams on legitimate online retail sites (28%).

In a separate question in that same survey, one third (33%) said that they had lost money to email, online, phone call or text messaging fraud in the last year. Nearly one third (32%) of those who said they lost money reported it happening via third-party seller scams on legitimate online retail sites. This was followed by 26% who lost money via money mule scams where users are solicited to transfer or move illegally acquired money on behalf of someone else, and 23% who lost money via stolen credit card or fraudulent charges.

These and other findings came from research used for building the newly released TransUnion (NYSE: TRU) H1 2025 Update to the State of Omnichannel Fraud Report, which shows how South African consumers continue to be targeted by fraudsters through a wide range of channels.

“With South Africa having the second greatest number of smartphone connections in Sub-Saharan Africa, with people using mobile phones to conduct their everyday business, connect with friends, or keep in touch with family, it’s easy to understand why digital fraud would be such a common tactic among fraudsters targeting this region,” said Amritha Reddy, senior director of fraud solutions at TransUnion Africa. "While cybercriminals will attack at any time using any channel, they appear to focus on channels most popular in the regions they are targeting.”

Nearly one third (31%) South African respondents indicated that they were not aware of being targeted by email, online, phone call or text messaging fraud at all, which raises questions as to whether these respondents were in fact targeted, yet simply unaware of the threat.

Based on the TransUnion study, South Africa had the greatest percentage of respondents among countries surveyed in Africa who said they fell victim to email, online, phone call or text messaging fraud in the second half of 2024. In contrast, Zambia had the lowest percentage of consumers who said they fell victim to fraud in the countries surveyed in Sub-Saharan Africa.

Table 1: Fraud Types Most Frequently Used to Target Consumers in Sub-Saharan Africa in the Last Three Months

   Source: TransUnion Consumer Pulse Survey of 1,000 people in South Africans in December 2024

Communities and Video Gaming Among Top Industries Targeted by Suspected Digital Fraud

Globally, TransUnion determined that communities (online forums and dating sites) experienced the highest rate of suspected digital fraud^[1] attempts in 2024. Nearly 12% of all attempted transactions within communities last year were suspected to be digital fraud. This was closely followed by video gaming (11%), with gaming (including online betting, poker, etc.) at 8% and retail (8%) rounding out the top four.

The logistics industry, which has seen growth in shipping fraud (often perpetrated by organised crime rings), saw the greatest suspected digital fraud volume growth globally in 2024, up more than 100% over 2023. That being said, the fraud rate remains at a relatively modest 3%. Gaming also saw a significant year-over-year (YoY) volume change, up 20%. Telecommunications (-79%), insurance (-29%) and video gaming (-23%) saw the greatest decreases in suspected digital fraud volume YoY.

“Digital fraud on community platforms is by no means a new phenomenon. In 2024, it appears that fraudsters targeted these areas with a renewed vigour,” said Reddy. “Cybercriminals take advantage of the trust inherent on community-based platforms, and target members with a wide range of scammer solicitations, the most reported type of digital fraud in communities.”

For attempted transactions where the consumer or fraudster was located in South Africa, gaming experienced the highest suspected digital fraud rate in 2024 at 6.3% with an 8.1% decrease in the volume of suspected digital fraud from 2023. The only South African industries in which suspected digital fraud increased YoY were insurance and communities.

“It is encouraging to see that attempts at digital fraud have decreased across all but two of the surveyed industries in South Africa,” Reddy says. “Organisations that draw on identity, device and behavioural insights to help them interact with legitimate consumers while mitigating fraud risk are more likely to protect themselves and their customers from the scourge of digital fraud.”

Table 2: Highest Digital Fraud Rates Across Leading Industries in South Africa

Source: TransUnion TruValidate™

Fraud Comes with a Heavy Cost to Consumers

Consumers faced significant losses due to fraud. Among consumers TransUnion surveyed in 18 countries and regions in November and December 2024, 29% said they lost money due to email, online, phone call or text messaging fraud in the last year. The survey determined that the median amount those consumers said they lost due to fraud in the past year was R32,447. For those who said they lost money due to fraud in South Africa, the median stated amount lost was R12,518^[2].

TransUnion came to its conclusions about digital fraud based on intelligence from TransUnion TruValidate.

Specific country and regional data in the report includes South Africa, Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Guatemala, Hong Kong, India, Kenya, Mexico, Namibia, the Philippines, Puerto Rico, Rwanda, Spain, the United Kingdom, the United States and Zambia. Download the TransUnion H1 2025 Update to the State of Omnichannel Fraud Report for more information and insights about the global fraud trends.
 

^{[1] The rate or percentage of suspected digital fraud attempts reflects those which TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation — compared to all transactions assessed. The country and regional analyses examined transactions in which the consumer or suspected fraudster was located in a select country or region when conducting a transaction. Global statistics represents every country worldwide and not just the select countries and regions.}

^{[2] Based on the exchange rate on 6 Jan. 2025}

The latest TransUnion South Africa Mobility Insights Report (formerly the Vehicle Pricing Index) for Q1 2025 highlights a strong rebound in the country’s automotive market. This recovery has been driven by improved consumer sentiment, declining interest rates, access to retirement savings through two-pot withdrawals, and rising real wages. According to naamsa data, new passenger vehicle sales continued their upward trajectory in the first quarter, with monthly volumes averaging over 34,000 units, the highest levels seen since Q3 2015.  

Affordability remains a key driver of vehicle purchasing and financing decisions. Creative financing options, longer ownership cycles, and the growing availability of value-oriented models are significantly reshaping consumer behaviour, particularly among younger and first-time buyers. The Q1 2025 TransUnion South Africa Mobility Insights report highlights that several emerging brands offering competitively priced vehicles have recorded strong year-over-year growth, contributing to the overall surge in new vehicle sales.

“South African consumers are returning to the vehicle market with a clear focus on value and flexibility,” says Lee Naik, CEO TransUnion Africa. “We’re seeing a continued shift away from traditional premium segments in favour of more accessible alternatives that meet evolving needs and budgets.”

Insurance Trends Reveal Shifting Landscape and Rising Risk

The Q1 2025 report introduces new data on insurance-linked vehicle asset finance (VAF). As of early 2025, only 39% of insured vehicle owners had financed vehicles, down from 44% in 2020. This signals a rise in alternative financing or lapses in insurance post-purchase, especially concerning as TransUnion’s  2024 Insurance Survey found that 25% of vehicle users had driven uninsured in the past six months.

This trend has implications for lenders, who face greater asset risk in the event of write-offs without insurance recovery, and for insurers, whose portfolios may now carry increased exposure. To mitigate these risks, strategies such as bundled insurance, usage-based coverage and low-cost flexible insurance models are growing in relevance.

Used Vehicle Momentum Slows as New Sales Lead Recovery
While used vehicles have dominated financing trends in recent years, Q1 2025 marked a notable shift back toward new vehicle purchases, driven by easing interest rates, improved entry-level model availability, and aggressive manufacturer incentives. Notably, the influx of competitively priced Chinese models has attracted budget-conscious buyers away from the used market, fuelling fresh growth in new vehicle registrations.

“Consumers are holding onto their cars for an average of six to eight years, compared to the previous five years, a trend that reflects affordability constraints and a more cautious approach to ownership,” says Naik.

Affordability and Flexibility Drive Change
The report reveals that shifting consumer preferences are reshaping the competitive landscape, with some established manufacturers experiencing year-over-year sales declines while more affordable and value-driven entrants continue to gain market share.

“The definition of value is changing,” says Naik. “It’s no longer just about the price tag, it’s about financing flexibility, long-term ownership costs, and trust in the product. That’s what’s driving consumer decisions today.”

Social Media's Growing Influence on South African Car Buyers

Generation Z’s¹ rising influence, with a 27.9% year-on-year increase in vehicle finance volumes, highlights why social media has become essential for automotive brands aiming to attract younger buyers. As South Africans spend over 3.5 hours daily on platforms like TikTok, Instagram, and YouTube, 76% of users now turn to social media for product research, pushing automotive brands toward digital-first strategies with influencer campaigns, short-form videos, and interactive content, yet South Africa’s low social media ad spend signals a major untapped growth opportunity for marketers.

Social platforms are reshaping how South African consumers research, engage with, and purchase vehicles, particularly among Gen Z and Millennials¹ who expect personalised, digital-first experiences. To stay competitive, brands are adopting influencer collaborations, platform-specific strategies, AI-enabled targeting, and immersive tools like augmented reality and virtual reality. Social commerce is gaining ground as buyers look for seamless, in-app journeys from browsing to booking.

Economic Outlook: Growth with Caution
The broader economic outlook for South Africa in 2025 remains cautiously optimistic, with GDP expected to grow by 1.4%, driven primarily by household consumption. While industrial output remains under pressure, consumer-driven sectors, particularly retail and vehicle sales, continue to show resilience. Vehicle export activity rose modestly by 0.4% year-over-year in Q1 2025, signalling a gradual recovery following the sharp decline in the previous quarter.

“The strong recovery in new vehicle sales is a positive sign,” says Naik. “But sustaining this growth will require policy certainty, infrastructure investment, and structural reforms. Without these, the economy remains vulnerable.”

“The South African automotive sector is adapting to new consumer behaviours and market forces. The insurance gap, affordability options, credit access and rising Gen Z¹ participation will shape the road ahead. Collaboration across industry players is vital for long-term growth,” concludes Naik.

Read the full TransUnion South Africa Mobility Insights Report  here.

¹ Generation X (Gen X): Born 1965–1980; Millennials (Gen Y): Born 1981–1996; Gen Z (Generation Z) Born 1997–2012

ENDS

Notes to Editors: To provide you with timely market insights, we are updating our reporting structure.

Starting this quarter, the Vehicle Pricing Index will be renamed the TransUnion South Africa Mobility Insights Report, reflecting our broader focus on mobility trends. Vehicle Finance data will now be included in the TransUnion South Africa Industry Insights Report (IIR).

According to the Consumer Pulse Study, nearly one in three South Africans (31%) check their credit reports on a monthly basis, a significant step in the right direction. More than half (54%) of those who check their reports do so with the intention of improving their credit scores, showing a shift toward long-term financial empowerment.

“We’re seeing a rise not only in credit awareness, but in the importance of checking and understanding your credit report, which is an incredibly positive sign,” says Fatgie Adams, Head of Credit Risk Solutions at TransUnion Africa. “Knowing your credit report and credit score is one of the simplest yet most powerful ways to take control of your financial future. It opens the door to better lending rates, protects against fraud, and supports better decision-making.”

A deeper understanding of how to read the data on your credit report is also essential. A credit report provides a snapshot of your credit activity and how lenders perceive your creditworthiness. It typically includes information like:

• Credit accounts: Active credit lines, such as loans, credit cards, and retail accounts.
• Payment history: A record of whether payments have been made on time or not.
• Credit inquiries: Details of companies that have reviewed your credit in recent months, usually as a result of a credit application.
• Credit utilisation: The ratio of the credit you’re using versus your total available credit, which impacts your score.
• Outstanding debt: Current balances and any overdue amounts on existing credit lines.

By learning to read this data, consumers can spot potential errors, identify areas for improvement, and gain insights into how their credit management practices impact their scores. Understanding these elements not only helps improve your score but also boosts your financial confidence when applying for loans or credit.

While this progress is encouraging, the study also highlighted opportunities for deeper financial vigilance. Only 34% of consumers currently check their credit reports as a means of fraud prevention. Notably, although 50% of respondents reported being targeted by scams or fraud in the past three months, but did not fall victim, indicating a promising increase in consumer awareness and resilience

With 37% of South Africans planning to apply for new or refinanced credit in the next 12 months, understanding one’s credit standing and how to interpret the information on your credit report becomes even more crucial, particularly in today’s challenging economic climate.

“We encourage consumers to make credit report checks part of their regular financial routine,” adds Adams. “It takes just a few minutes and it’s one of the most effective tools for staying financially fit and fraud aware.”

Quick Tips for a Healthier Credit Score

• Pay on time: Late payments can negatively impact your score. Consistent, timely payments are crucial!
• Keep credit usage low: Aim to use less than 30% of your available credit to maintain a healthy score.
• Check your report regularly: You’re entitled to one free TransUnion credit report each year. Regular checks help you stay informed.
• Dispute any errors: Incorrect details can unfairly impact your score. TransUnion offers free dispute services to correct inaccuracies.
• Limit new credit applications: Too many at once can lower your score. Be mindful of how often you apply for new credit/ loans.

To check your credit score for free and learn more, visit www.transunion.co.za.

According to TransUnion’s (NYSE:TRU) Q4 2024 South Africa Industry Insights Report, the country’s credit card issuers have adapted their acquisition strategies to enable prudent growth, while effective risk management has led to a decline in account-level delinquencies. During Q4 2024, credit card issuers reduced the average credit card limit on new accounts by 3.9% year-over-year (YoY), while at the same time they increased credit limits on existing credit cards^[1] by 5.0%.

The limit increase observations were prominent among prime plus consumers (+4.1% average credit limit increase) and super prime^[2] consumers (+1.8%). As a result of higher line access and consumers continuing to leverage credit cards to meet financial and transactional needs, total outstanding balances rose by 7.8% YoY. These insights are echoed in TransUnion South Africa’s Q4 2024 Consumer Pulse Report, where 13% of consumers responded that they had increased their usage of available credit.

An improving performance picture, as observed since Q2 2022, continued as delinquencies (measured as accounts 90 days or more past due) decreased by 34 basis points (bps) YoY during Q4 2024. This trend shows that South African consumers have been able to maintain their credit card payment obligations, while leveraging their cards to navigate the continued high cost of living that has put pressure on disposable income.

“Lenders who are sustaining growth and profitability are drawing on enhanced risk attributes to stimulate a greater share of spend and wallet by identifying consumers who are likely to use credit lines judiciously,” said Lee Naik, CEO of TransUnion Africa. “At a time when new account acquisition is costly, enabling lower-risk consumers to re-engage with their inactive cards, or to extend the use of existing cards, will encourage prudent growth and enable customer loyalty.”

Personal loan lenders target younger borrowers

While personal loan originations from traditional banks declined by 6.2% YoY in Q4 2024, personal loan originations from non-bank lenders increased by 13.9% YoY. Non-bank personal loan originations among Gen Z^[3] consumers grew by 48.5% YoY, with this cohort accounting for 15.5% of all non-bank originations.

Non-bank personal loan originations increased YoY across all risk tiers (except for the super prime risk tier, where originations declined by a marginal 1.0% YoY), with the greatest increase seen among prime borrowers (16.1%). However, bank personal loans declined across all risk tiers YoY, except for subprime, where they increased by 6.0% YoY.

Banks are expanding their personal loan offerings to a greater proportion of subprime borrowers. Among bank personal loans, the share of subprime borrowers increased from 53% in Q4 2023 to 58% in Q4 2024, with the share of near prime borrowers remaining consistent across the year. There were minimal YoY fluctuations across the remaining risk tiers. In contrast, the distribution across risk tiers for non-bank personal loans remained consistent over the last two quarters of 2024.

The personal loans market continues to be dominated by younger borrowers, although the total share of originations by borrowers aged 45 and younger did decline marginally in 2024. Seventy-five percent of bank personal loans were granted to Gen X and Millennial customers during Q4 2024, down from 78% one year prior, while 70% of non-bank personal loans were granted to the same age group in Q4 2024, compared to 72% one year prior. At the same time, both lender types are growing their portfolio among the youngest Gen Z borrower group, with 19% of bank personal loans going to Gen Z borrowers in Q4 2024, up from 16% one year prior, and 16% of non-bank personal loans going to these consumers in Q4 2024, up from 12% one year prior.

With respect to credit performance, bank personal loan account-level delinquencies at 90+ days past due dropped by eight bps YoY to 26.6%, while non-bank personal loan delinquencies increased by 452 bps to 40.6%.

“Non-bank personal lenders have a more tolerant risk appetite than banks, and they are responding positively to market demand across age groups and risk tiers,” says Naik. “Lenders that maintain rigorous risk assessment practices that enable greater and earlier prediction of risk, offer education on how to use and manage credit, and empower younger consumers to build their credit profiles, will ensure the continued sustainability of the personal loan market.”

Vehicle loan market continued its recovery path

The vehicle loans market showed encouraging signs of continued growth, as origination volumes increased by 9.6% YoY, and average new loan amounts grew by 1.4%. The greatest growth in originations was observed among Gen Z consumers, where originations grew by 27.9%, although their share of total new finance agreements remains relatively low compared to older age groups. This is the second consecutive quarter in which total vehicle loan originations grew YoY, with the last increase in origination volumes before these two increases having been in Q3 2022. Given the 0.25 bps decrease in interest rates as of November 2024 and a positive outlook for consumer confidence, the vehicle loan market is expected to continue this recovery trend.

These positive trends were also evident in the Q4 2024 TransUnion South Africa Vehicle Pricing Index, that revealed a growing share of financed vehicles within the R250,000 to R750,000 price range. This shift suggests that, while affordability may still be a concern, consumers are prioritising flexible financing solutions and adjusting their purchasing behaviour to align with available credit and economic conditions.

“While the two recent interest rate decreases were just 25 basis points each, the significant increase in new vehicle loan originations indicates that South Africans are becoming more optimistic about their financial futures,” says Naik. “While vehicle ownership is aspirational for many individuals, it’s also the key to unlocking growth for entrepreneurs, and the owners of micro and small enterprises, all of whom are the engines of economic growth in South Africa.

“As part of our drive to expand financial inclusion, TransUnion has included a wide range of alternative data into our scoring solutions, so that more South Africans are more visible in our risk scoring models, in turn creating the platform for them to access finance for the first time.”

 Table 1: Key South African Credit Market Metrics (Q4 2024 vs Q4 2023)

 *Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears

• ^[1] Credit card accounts that are currently open and active in the portfolio.
• ^[2] Scores are based on TransUnion’s CreditVision® generic scoring methodology. Risk distribution key: subprime (0-625), near prime (626-655), prime (656-695), prime plus (696-720), super prime (721-999).
• ^[3] TransUnion age distribution: Gen Z (Born 1995 – 2010); Millennials (Born 1980-1994); Gen X (Born 1965-1979); Baby Boomers (Born 1946-1964

Global information and insights company TransUnion Africa is pleased to announce the appointment of Lindani Dube as Chief Human Resources Officer and Vice President of TransUnion Africa, leading TransUnion’s operations across Africa, effective 6 January 2025.

Dube brings over 20 years of experience driving growth, HR effectiveness, and cultural transformation for multinational organisations across Sub-Sahara Africa, East and West Africa, and Europe. Her strategic leadership, combined with her passion for people development, positions her as a dynamic force in spearheading innovation and growth at TransUnion in Africa.

In her new role, Dube will oversee all HR functions across TransUnion’s Africa-based markets and centres, including GCC Africa, ensuring alignment with the organisation’s vision and business goals.

In her distinguished career, Dube has held executive HR roles at LafargeHolcim, MultiChoice, General Electric, Worley Parsons, and Howden Africa Holdings. She has led essential cultural transformation initiatives, significantly improved organisational performance, and championed diversity, equity, and inclusion programmes. Notably, her strategic acumen has delivered measurable results, including optimising workforce structures, negotiating impactful agreements, and driving business efficiencies.

Lee Naik, CEO of TransUnion Africa, commented: “Lindani is an extraordinary leader with a proven track record of aligning HR strategies to business outcomes. Her innovative approach to unlocking talent and driving cultural transformation will undoubtedly elevate TransUnion’s mission of delivering ‘Information for Good.’ We look forward to the energy and expertise she will bring to our teams across Africa.”

Dube is equally enthusiastic about her new role, saying: “I am excited to join an organisation that prioritises growth, innovation, and people development. I look forward to contributing to TransUnion’s vision by driving impactful HR strategies that build a culture of excellence, inclusion, and empowerment.”

Dube holds a Master’s in Business Leadership (Strategic HR Management) from UNISA School of Business Leadership and a postgraduate business management diploma. She is an accredited coach and an active member of professional bodies, including the Institute of Directors South Africa (IoDSA).

"Leading TransUnion Africa across eight countries has taught us that true transformation happens when we invest in people first. Our commitment to solving problems that matter has delivered tangible positive impact. This year we launched a groundbreaking middle manager development programme with Duke Corporate Education for high-performing associates, we advanced financial inclusion initiatives reaching millions across Africa and achieved 55% women representation across our employee base. Additionally, we've strengthened mental health support systems for our teams. The impact on our culture, innovation, relevance, and results is tightly correlated with our investment in making our business a great work environment for our employees and prospective recruits," said Lee Naik, CEO of TransUnion Africa.

Championing Diversity and Inclusion

“TransUnion GCC Africa, a fully virtual employer, has grown to almost 1,000 employees in just under four years. The TEI certification acknowledges our commitment to excellence in every aspect of our operations. We have built a highly skilled and motivated team by continuing to invest significantly in our people through initiatives such as sponsored education and learnerships. To date, we’ve spent R12+ million on sponsored education and external training, and had 278 learners go through our learnership programme — 55% were female, 68% have either been absorbed into full time employment or are currently finishing the programme. This creates career growth opportunities while supporting our mission to deliver premium experiences for TransUnion’s clients and consumers in 30+ countries," said Shobana Maikoo, Head of the GCC Africa.

Benchmarking Excellence in HR Practices

The Top Employers Institute programme certifies organisations based on the participation and results of their HR Best Practices Survey. This survey covers six HR domains consisting of 20 topics including People Strategy, Work Environment, Talent Acquisition, Learning, Diversity, Equity & Inclusion, Wellbeing and more. TransUnion's consistent recognition by TEI reflects its commitment to excellence and continuous improvement in HR practices.

The programme has certified and recognised only 2,400 Top Employers in 125 countries/regions across five continents.

According to TransUnion’s (NYSE:TRU) Q3 2024 South Africa Industry Insights Report, consumption credit products (credit cards, personal loans, retail revolving lines) continued to experience growth, with originations growing by 14.4% year-over-year (YoY) in Q3 2024 as consumers find ways to adapt to the persistent high cost of living in South Africa. Retail revolving credit experienced the highest origination growth among all major products, up 21.9% YoY, and average new credit limits assigned rose by 13.3% year over year.

Additionally, the credit card market experienced steady positive momentum in consumer demand and supply. Cards have benefitted from greater consumer adoption, likely driven by the resilient ecommerce sector that has outperformed the overall retail sector. Furthermore, the increased usage of digital wallets, embedded in smartphones that integrate digital copies of credit cards, has enabled consumers to tap into an amplified purchasing convenience at point of sale. This is especially important for younger consumers, who prioritise convenience and speed above other factors when it comes to payment channels of choice.

TransUnion’s Q3 2024 Consumer Pulse Survey (CPS) showed that 13% of consumers surveyed cut back on savings for retirement, potentially leading to more disposable income. The survey further showed that 25% of consumers (higher by three percentage points compared to Q2 2024) responded that their household income is not keeping up with the rate of inflation. As inflation dropped below the South African Reserve Bank’s target range in October 2024, the market anticipates further interest rate cuts, which may help in alleviating the high cost of living and borrowing.

An improving picture of credit performance observed in Q3 2024 further indicates consumers’ priorities for maintaining access to credit, as well lenders’ strategies for managing risk effectively. As inflation and interest rates ease, consumers may experience an improvement in affordability, which would renew confidence in making larger purchases. In anticipation, lenders need to deploy strategies for identifying consumers with shifting needs and preferences to build and maintain loyalty among their existing bases. While portfolio growth is evident across major consumption-led products, implementing predictive analytics to sustain prudent growth becomes crucial.

 Table 1: Key South African Credit Market Metrics (Q3 2023 vs Q3 2024)

*Includes both bank-issued and non-bank-issued personal loans

** Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears

Vehicle Loans Recorded First Growth in Originations Since 2022

The vehicle finance market has experienced significant slowdown since Q3 2022, given the high cost of vehicles and cost of borrowing pressures. In this context, consumers have preferred to buy used vehicles over new vehicles to manage affordability pressures. This quarter marks a shift in the vehicle finance industry, with a YoY growth of 1.1% in vehicle loans originated – the first quarter of growth observed in two years.

While vehicle loan originations were up, vehicle sales overall dropped in the same period, down 7.1% YoY. Sales of new vehicles drove this drop, with a decline of 13.9% YoY. As new vehicle prices start to subside with cheaper manufacturers entering the South African market, and with a lower cost of borrowing easing affordability pressures, vehicle finance institutions are optimistic that they will see some recovery in the industry, particularly in new vehicle sales.

With vehicle loan originations increasing by 1.1% during Q3 2024, along with average new account amounts growing by 2.4%, this quarter’s data could indicate the beginning of an upturn in vehicle financing. This trend was supported by the September and November interest rate cuts, lower fuel prices, and the anticipation of further interest rate cuts early in the new year which may add further momentum.

A recent TransUnion study of South African consumers showed that the share of new vehicle loans opened by Gen Z consumers increased from 13.7% during Q3 2023 to 16.6% in Q3 2024, while other generation tiers declined in share. Within the first-time vehicle finance consumer segment, Gen Z^[1] consumers accounted for 30% of these first-time buyer loans in Q3 2024, up from 25% in the same quarter of 2023, and 18% in the same quarter of 2022. More importantly, first-time vehicle loan consumers tend to perform better or the same compared to repeat borrowers in this market, even when controlled for borrower risk scores, based on Transunion’s vintage performance analysis measured for vehicle loans originated from 2019 through 2022.

As the industry anticipates a recovery, it is pertinent for vehicle finance institutions to consider enhanced strategies to enable consumers entering the market to fulfil pent-up demand that was not met in the last few years due to lack of affordability. These strategies include prudently expanding credit access for consumers buying their first-ever vehicle, and empowering younger consumers with effective education tools to influence positive repayment behaviours that will equip them for a healthy financial future.

“As inflation slows and the cost of borrowing declines, there is potential for more consumers who previously only held unsecured credit products to graduate to the next step in their credit journeys by taking out a vehicle loan,” said Lee Naik, CEO of TransUnion Africa. “As levels of financial inclusion improve and more underserved consumers are able to secure vehicle and other loans, lenders have a real opportunity to create greater loyalty as well as improve credit education efforts. Putting consumers’ needs first will ensure better credit management and a healthier economy.”

^{[1] TransUnion age distribution: Gen Z (Born 1995 – 2010); Millennials (Born 1980-1994); Gen X (Born 1965-1979); Baby Boomers (Born 1946-1964).}

Among signs of economic recovery, South African consumers are feeling more optimistic about their financial future, with a notable rise in household income expectations and stability in debt management. These are among the insights in the Consumer Pulse Study for Q4 2024, published by information and insights company TransUnion, which explores consumer sentiment, behaviour, and emerging financial trends in South Africa*.

“Our findings indicate that while financial stability and optimism are growing, there’s still concern around critical themes like inflation and credit access, where consumers continue to feel the economic pressure,” said Fatgie Adams, Head of Credit Risk Solutions at TransUnion Africa.

Financial Optimism and Income Outlook on the Rise

The report shows that consumer confidence in income growth is higher than in previous quarters, with 79% of respondents expecting their income to increase in the coming year, up from 76% in Q3 2024, and from 74% in Q4 2023. Twenty percent of households reported a decrease in income in Q4, a small improvement over the previous quarter, while 42% of households said their income remained the same. Optimism about income is particularly strong among younger generations, with 86% of Gen Z and 85% of Millennials^[1] anticipating improved earnings.

South Africa’s easing inflation, down to 3.8% in September 2024 (the lowest since April 2021^[2]), and a 0.25% interest rate^[3] cut in the same month have contributed to this positive outlook. With some economists expecting inflation to slow further in Q4, consumers are gaining greater financial stability. In addition, 76% of respondents expressed optimism in their household finances, a five-percentage point increase from the previous year, reflecting an overall trend toward greater resilience.

Spending and Financial Priorities Shift Toward Debt Repayment and Savings

The study highlights a trend of prioritising debt repayment and savings, particularly among younger consumers. In Q4, 65% of respondents reported being able to pay their bills in full, a six-percentage point YoY increase, with Gen Z and Millennials leading the trend at 68% and 66%, respectively. Meanwhile, 52% of consumers have cut back on discretionary spending, with Gen X (65%) and Baby Boomers (62%) the most likely to make adjustments. Reductions in digital services (26%) and cancelled memberships (30%) were among the most common cost-cutting measures.

A growing number of consumers are also focusing on building emergency savings. Thirty-six percent of Gen Z and 30% of Millennials increased their contributions to emergency funds or stokvels in Q4, with 28% of all consumers prioritising this goal. Retirement savings saw a similar increase, with 24% contributing more than in previous quarters.

“The shift toward building financial resilience is significant, especially as younger generations balance immediate debt obligations with future savings,” said Adams.

Slight Decline in Credit Access and Growing Demand for New Credit

Credit access remains a top priority for South African consumers, with 93% indicating that access to credit is essential for achieving financial goals. However, only 38% feel they have adequate access, a slight decline from Q3. Demand for new credit has increased, with 37% of consumers planning to apply for new credit within the next year. Interest is strongest among Gen Z (41%) and Millennials (45%), with credit cards, personal loans, and ‘buy now, pay later’ services among the most sought-after options.

Despite this demand, 54% of respondents ultimately decided not to pursue credit applications, with 31% citing the high cost of credit as a deterrent, even after the recent interest rate cut. Other factors included finding alternative funding sources (30%) and concerns about income or employment stability (28%). These findings highlight a disconnect between consumer demand for credit and the challenges posed by high costs and economic uncertainty.

Increased Vigilance in Identity Protection Amid Rising Digital Fraud

Digital fraud remains a prevalent issue, with 13% of South African consumers reporting they fell victim to fraud in Q4, up three percentage points from Q3. Younger generations, who are more likely to monitor their credit reports, showed a higher awareness of fraud risks. The study found that 57% of all respondents check their credit report at least monthly, while 63% of Gen Z and 69% of Millennials do the same. Common scams include money and gift card schemes, smishing (fraudulent text messages), and phishing (fraudulent emails, websites, social posts and QR codes).

Despite these proactive steps, among those who haven’t acted on cybersecurity concerns, 60% were uncertain about how to protect themselves, underscoring the need for more comprehensive guidance on digital security. With the increase of cybercrime, 52% of consumers reported changing passwords for potential compromised accounts, and 41% reviewed their credit reports for any unusual activity. “The rise in fraud awareness is encouraging, but there’s still a clear need for stronger consumer education on digital safety practices,” noted Adams.

Looking Ahead: Financial Strategies for Q1 2025

In response to anticipated financial pressures, South African consumers plan to make targeted adjustments in their budgets. Top priorities include reducing discretionary spending (46%), increasing retirement savings (42%), and holding back on large purchases (41%) in the months ahead. This focus reflects a continued trend toward cautious financial management and a growing emphasis on future financial security.

“The Q4 findings demonstrate that South Africans are becoming more financially resilient and proactive, but challenges remain, particularly in areas like credit access and digital security. As we move into 2025, empowering consumers through financial literacy, secure digital tools, and accessible credit will be essential in helping them achieve financial stability and growth,” said Adams.

Consumers are eligible to receive one free credit report every 12 months. Consumers can get their free annual credit report from TransUnion here.

* TransUnion’s Consumer Pulse survey of 1,000 adults was conducted 25 Sep.–9 Oct. 2024 by TransUnion in partnership with third-party research provider, Dynata. Adults 18 years of age and older residing in South Africa were surveyed using an online research panel method across a combination of desktop, mobile and tablet devices.

^{[1] Generations are defined in this research as follows: Gen Z, 18–26 years old; Millennials, 27–42 years old; Gen X, 43–58 years old; and Baby Boomers, age 59 and above.}

^{[2] South Africa Inflation Rate}

^{[3] Statement of the Monetary Policy Committee September 2024}

Global information and insights company TransUnion Africa is pleased to announce the promotion of Jason Hawkins to Vice President (VP) and Chief Financial Officer (CFO) Africa, effective 1 November 2024. Hawkins has served as the acting CFO for Africa for the past four months, demonstrating exceptional leadership and strategic business partnership throughout this period.

Hawkins joined TransUnion Africa in 2014 and has since led multiple functions within its finance team, including financial planning and analysis, billing, accounts receivable, and revenue management. Known for his expertise in commercial finance, he has driven value-added processes that enhance core customer agreements and supplier arrangements. His efforts have strengthened billing and revenue assurance controls and improved TransUnion Africa’s day sales outstanding position, showcasing his dedication to operational excellence.

With over 25 years of finance experience, Hawkins’ career includes 19 years at Coca-Cola South Africa, where he held various finance management roles, including Finance Manager for Stills & Specialty Beverages and Group Accounting & Budgeting Manager. His extensive experience spans more than 25 countries and includes board roles, such as serving on the TransUnion Africa Provident Fund as Trustee and Chairperson. He has also held past board roles with the Coca-Cola Provident Fund and as a non-executive director for PETCO Recycling.

Lee Naik, CEO at TransUnion Africa, commented on Hawkins’ promotion: “Jason has been an integral part of TransUnion’s growth over the past decade, consistently driving value across our financial functions. His strategic insight and dedication to operational excellence make him the ideal leader for this role, and I am confident he will continue to advance our mission to empower businesses and consumers through trusted financial insights.”

Hawkins added: “I am deeply honoured to step into the role of CFO for TransUnion Africa. Over the past decade, I have witnessed the incredible effect our financial strategies have had on our growth and resilience. I look forward to continuing to drive value and collaboration across our teams, helping TransUnion Africa deliver even greater results for our clients and the communities we serve.”

In his new role, Hawkins will lead the TransUnion Africa finance team, focusing on embedding finance as a key business partner in strategic planning and operational execution to drive business success.

TransUnion was honoured as a finalist across three prestigious categories at the 2024 Gender Mainstreaming Awards. The company’s finalist status reflects its continued commitment to advancing Diversity, Equity, Inclusion and Belonging (DEIB) within the workplace, and its dedication to building innovative workplaces and developing talent.

The Gender Mainstreaming Awards, hosted by Business Engage, celebrate the achievements of organisations that are committed to increasing the meaningful representation of women across business sectors in Africa. TransUnion was recognised as a finalist in the following categories:

• TransUnion GCC Africa — Investing in Young Women Award for its remarkable efforts in empowering the next generation of women through training, mentorship and career-building opportunities.
• TransUnion Africa — Women on Executive Committees in Multinationals Award, a recognition of the company's success in advancing women into leadership positions and ensuring meaningful representation across its executive teams.
• Shobana Maikoo, Head of TransUnion GCC Africa — Inclusive Leader Award, recognising her as a leader who embodies inclusivity and drives transformative change in the workplace.

“We are extremely proud of the recognitions, which reflect our ongoing efforts to build an inclusive and empowering work environment,” said Lee Naik, CEO and regional president at TransUnion Africa. “The acknowledgements reinforce our commitment to creating sustainable career opportunities for young women and ensuring women are represented at all levels of leadership.”

Advancing Opportunities for Young Women

Under Maikoo’s leadership, TransUnion’s GCC Africa has expanded its training and upskilling investments to R5.9 million in 2024, with 81% of beneficiaries being women. This approach provides young people with the skills and support they need to succeed in a highly competitive global marketplace.

Inclusive Leadership at the Forefront

TransUnion Africa’s executive committee is now more than 60% women, a significant leap from 2017 when it was at 40%. This progress highlights TransUnion Africa’s continued focus on promoting gender diversity and inclusion, creating opportunities for women to lead in multinational environments. Three of the company’s female leaders also serve on boards within TransUnion across the African region, further driving inclusivity.

Recognition for Transformative Leadership

Maikoo's leadership has been instrumental in expanding the GCC Africa from 50 employees in 2021 to over 950 employees in 2024, 70% of whom are women. Her leadership has led to a workplace where inclusivity is more than a goal, it’s part of the company’s DNA. With 40% of training programme graduates securing permanent employment in the TransUnion GCC Africa, of which 4% are differently-abled, the organisation remains an excellent example of equal opportunity and inclusivity.

A Bright Future for Inclusive Workplaces

“We believe in cultivating a workplace where everyone can thrive, and these recognitions are a testament to our commitment,” said Maikoo. “Inclusion isn’t just about having policies in place, it’s about creating an environment where diverse voices are heard, valued and empowered.”

TransUnion Africa and the GCC Africa continue to set the standard for gender inclusivity and leadership in South Africa and beyond, reinforcing the company’s position as an employer of choice and a catalyst for positive social change.

In the first half (H1) of 2024, 4.9% of all attempted digital transactions where the consumer was located in South Africa were identified as suspected Digital Fraud in a recent TransUnion analysis. TransUnion also determined telecommunications, financial services and communities (online dating, forums etc) were the industries that had the highest suspected Digital Fraud rate for transactions where the consumer was in South Africa during the analysis period.

South Africa had the eighth highest rate of suspected Digital Fraud in the first half of 2024 out of the 19 countries where TransUnion provided regional breakdowns in its analysis. This is at a time when about six in 10 (59%) South African consumers said in Q2 2024 that they were targeted by email, online, phone call or text messaging fraud in the past three months^[1], increasing to 60% in Q3 of this year^[2].

Some of these findings are in the newly released TransUnion^® (NYSE: TRU) H2 2024 Update to the State of Omnichannel Fraud Report, which explores fraud trends in the first half (Jan. 1-Jun. 30) of this year. It found that some industries were particularly targeted, even though Digital Fraud affects many industries in South Africa.

“Despite the good-faith efforts that are being made by global organisations to identify and prevent fraud to date, fraudsters continue to evolve. In that sense, businesses should ensure that they are taking advantage of fraud prevention technologies such as identity verification, IP intelligence, device reputation and synthetic identity detection as critical components of their fraud prevention programs,” says Amritha Reddy, senior director of fraud solutions at TransUnion South Africa.

Table 1: Industries with the Highest Rate of Suspected Digital Fraud Attempts Where the Consumer was in South Africa in H1 2024

Source: TransUnion TruValidate™

The communities industry experienced the largest percentage (11.5%) of suspected Digital Fraud globally in H1 2024, according to data in TransUnion TruValidate. Globally, TransUnion’s communities customers reported profile misrepresentation (where a user posts inaccurate information in a profile and/or uses bogus profile photos) as the most frequent type of Digital Fraud they witnessed in H1 2024. Communities was the industry with the highest suspected Digital Fraud rate in seven of the 19 countries and regions for which TransUnion provided breakdowns in H1 2024.

New Account Fraud Risk Threatens Digital Experiences

Digital fraud can occur at different steps in a customer’s transaction process, and more than two-thirds of business leaders surveyed by TransUnion indicated that at least 25% of their organisation’s new account openings are done online, with more than a third saying that it was 51% or more^[3]. In South Africa, 5.1% of attempted digital account logins were suspected of Digital Fraud, with 2.9% of digital account opening attempts being suspected of Digital Fraud.

TransUnion also determined synthetic identity fraud (the use of personally identifiable information or PII to fabricate a person or entity in order to commit a dishonest act for personal or financial gain) was the fastest growing Digital Fraud type volume-wise reported to TransUnion by its customers from H2 2023 to H1 2024, increasing 153%. Electronic fund transfers (also known as ACH/debit payments) fraud saw the highest YoY volume growth, up 113% from H1 2023 to H1 2024. However, promotion abuse (consumers or fraudsters taking advantage of marketing offers to receive unintended financial incentives) was the most common Digital Fraud type globally in H1 2024, accounting for 3.6% of all Digital Fraud reported to TransUnion by its customers.

About the Analysis

TransUnion came to its conclusions about Digital Fraud based on intelligence from its identity and fraud product suite that helps secure trust across channels and delivers efficient consumer experiences – TransUnion TruValidate. The rate or percentage of suspected Digital Fraud attempts reflect those that TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) determined to be fraudulent upon customer investigation, or 4) determined to be a corporate policy violation upon customer investigation —compared to all transactions it assessed for fraud. 

Download the TransUnion H2 2024 Update to the State of Omnichannel Fraud Report to learn more. Specific country and regional data in the report include South Africa, Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Hong Kong, India, Kenya, Mexico, Namibia, the Philippines, Puerto Rico, Rwanda, Spain, the United Kingdom, United States, and Zambia.

^[1] TransUnion Q2 2024 Consumer Pulse survey of 911 South African adults between May 1–13, 2024.

^[2] TransUnion Q3 2024 Consumer Pulse survey of 952 South African adults between July 16-31, 2024.

 ^[3] TransUnion business survey of 801 business leaders from May 14–29, 2024

Global information and insights company TransUnion Africa is proud to announce the promotion of Gerhard Muller to the position of Chief Data and Analytics Officer (CDAO). In this newly created role, Muller will lead the Data and Analytics department across Africa, while also joining the TransUnion Africa Executive team.

Muller brings extensive experience from the financial services industry, having joined TransUnion in February 2020 as the leader for the Data Science and Analytics (DSA) capability. Prior to this, he held several key roles, including Associate Director at PwC South Africa, where he established an Artificial Intelligence competency within risk assurance services, developing technical capabilities and infrastructure. Muller also spent five years at Standard Bank as the Head of Unsecured Credit Originations and Head of Credit Card Originations, where he led teams responsible for credit risk strategies and advanced analytics for unsecured lending portfolios. Earlier in his career, he served as an analyst at Nedbank, managing direct marketing campaigns on the personal loans book.

His wealth of experience has been instrumental in transforming TransUnion’s DSA function across Africa, building a strong team with enhanced analytical tools and capabilities that continue to significantly contribute to the performance of the business.

“I am incredibly honoured to take on this new role and lead such a talented team. Together, we will continue to innovate and deliver data-driven solutions that empower our clients to make informed decisions. I look forward to building on the great work we’ve already achieved and driving even greater success for TransUnion Africa and the clients and consumers it serves,” said Muller.

The newly enhanced Data and Analytics department will oversee the full value chain of data – from acquisition to analysis, modelling, and insights, ensuring TransUnion Africa remains at the forefront of data-driven solutions for its clients. Muller will also work closely with other functional areas and continue collaborating with the Solutions, Sales and Operations teams to develop innovative, efficient solutions for TransUnion's clients.

Lee Naik, CEO at Transunion Africa commented on Muller’s promotion, stating, “Gerhard has been instrumental in advancing our data and analytics capabilities across the region. His leadership and strategic vision have had a reflective impact on the business, and I am confident that in his new role, he will continue to elevate TransUnion’s data-driven innovations and contribute to our growth.”

TransUnion's latest Vehicle Pricing Index (VPI) for Q2 2024, which integrates alternative data and several market-leading sources, shows a 6% decline in new vehicle sales and a 6.1% drop in total vehicles financed from the previous quarter.

Despite this, the market is showing signs of resilience, with a slight increase in consumer confidence and positive trends in generational shifts toward vehicle financing. The used-to-new ratio of financed vehicles moved to 1.44, up from the 1.15 of Q1 2024. This indicates a growing consumer preference for used vehicles. This preference comes at a time when used vehicle prices have risen by just 0.6% year-over-year (YoY), well below the rate of inflation. Over the same period, new vehicle prices rose by 4.4%, suggesting the market is under strain and that affordability remains a priority.

The Vehicle Asset Finance (VAF) sector saw a contraction on both a YoY and quarter-over-quarter (QoQ) basis in Q2 2024, marking the fifth consecutive quarter of YoY decline in new VAF accounts. The total number of active VAF accounts from Q2 2020 to Q2 2024 stagnated to 2.1 million. Even so, the total balance of VAF accounts grew by 16%, driven by higher interest rates and the overall value of financed vehicles. The growth driven by the low-interest-rate environment has effectively been erased, with new accounts unable to gain traction. This places additional pressure on the automotive industry to attract new financing customers and stimulate demand, particularly for new vehicles.

“Although the economic environment remains tough, the automotive sector is showing innovation in addressing consumer affordability concerns,” says Marcia Mayaba, Sales Vice President: Auto Information Services at TransUnion South Africa. “The vehicle financing landscape is evolving, with growing interest from younger generations who are reshaping the market through their preference for flexible financing models and electric vehicles.”

Affordability and inclusion key to reviving vehicle financing

The FNB/BER Consumer Confidence Index (CCI) rose five points in the previous quarter to -5, its highest level since the first half of 2019. This was largely driven by reduced power outages and lower fuel prices. However, with the index still in negative territory, consumers remained cautious during the quarter amidst concerns about sustained high interest rates and the local elections.

In Q2 2024, the average loan value for financed vehicles rose slightly to R400,000 (up from R391,000 in Q1 2024), reflecting the ongoing financial pressures on consumers. The number of new VAF accounts has dropped to its lowest point since Q2 2020, highlighting the enduring effects of ongoing economic challenges.

Despite the contraction in vehicle financing, delinquency rates have remained consistent. This stability suggests that, although fewer new accounts are being opened, those within the system are maintaining their repayments, reflecting the sector’s resilience in managing defaults even as it navigates a challenging economic environment.

“Affordability remains a major concern, but there is an opportunity to foster financial inclusion by expanding product offerings. Subscription models, vehicle-on-demand services, and tailored financing solutions for low-income consumers could help reverse the decline in new VAF accounts,” says Mayaba.

A generational shift

In Q2 2024, consumer behaviours continued to evolve as economic conditions shaped purchasing decisions. A key trend was the rising influence of Gen Z (people born between 1997 to 2012) whose share of new VAF agreements grew from 7.9% in Q2 2023 to 10.9% in Q2 2024. Meanwhile, Baby Boomers’ (people born between 1955 to 1964) share dropped from 8.3% to 7%, reflecting a generational shift in vehicle financing.

Millennials (people born between 1981 to 1996) continued to dominate the market, accounting for 40% of new vehicle purchases. The growing influence of younger generations signals a shift toward more flexible, digital-first financing options and sales of electric vehicles (EVs) gradually gaining traction as sustainability becomes a central concern for younger buyers.

The road to EV adoption

Looking ahead, the report highlights the growing potential of EVs in South Africa. While EV sales still represent a small percentage of total vehicle sales, there is optimism about future growth, especially as global trends indicate a shift toward more sustainable transportation options.

“The adoption of EVs is inevitable, particularly as younger, environmentally conscious consumers drive demand. While the initial uptake has been slow due to higher costs and limited infrastructure, improvements in battery technology, the expansion of charging networks, and potential government incentives are set to accelerate this shift,” says Mayaba.

Comparisons to markets like Europe and China, where EV adoption is rapidly increasing, highlight the room for growth in South Africa. For this to happen, more affordable EV models must be made available. Furthermore, financing options tailored for the younger generation will be essential to help push EV sales forward.

“Increased focus on sustainable transportation, coupled with expanding infrastructure and growing consumer awareness, positions EVs as a key component of South Africa’s automotive future,” says Mayaba.

Innovation ahead

The South African automotive market continues to face significant challenges, but the future offers opportunities for growth through innovation.

“The focus should be on adapting to changing consumer preferences, leveraging the rise of EV technology, and offering more flexible financial solutions. These strategies will be essential for the industry’s long-term sustainability and growth.

“The Q2 2024 VPI highlights the need for all industry players to be more adaptable at a time when fostering economic empowerment and financial inclusion are critical to gaining momentum in an evolving market,” concludes Mayaba.

//ENDS//

Notes to Editors:

The TransUnion Africa Vehicle Price Index (VPI) measures the relationship between the increase in vehicle pricing for new and used vehicles and uses vehicle sales data collated from across the industry.

Our VPI now includes data on new vehicle asset financing from SACRRA. SACCRA data is made available to the industry at the end of a quarter for the preceding quarter.

According to TransUnion’s (NYSE:TRU) Q2 2024 South Africa Industry Insights Report, the number of overall credit originations (a measure of new accounts opened) increased by 15.2%, as South Africans increasingly used new and existing credit products to meet their rising consumption needs via credit cards, personal loans, and retail revolving loans.

Overall, the number of credit active consumers grew by 4.7% YoY to 18.5 million people, of which 28.1% hold credit cards, demonstrating that more South Africans have access to financial products and services to facilitate lifestyle essentials^[1] . Originations for consumption-led products i.e. facilities to pay for day-to-day expenses, accounted for 83% of all new credit opened, growing by 16.8% YoY in Q2 2024. The country’s credit market stood at an outstanding balance of R2.37 trillion, up 3.7% YoY, with total balances within consumption-led products up 5.1% YoY.

During Q2 2024, Millennials (46%) and Gen Z (16%)^[2] together accounted for nearly two thirds (62%) of all new credit originations, with 60% of Gen Z originations issued among 26 to 29 years old, and one third issued to consumers aged 22-25 years.

According to TransUnion’s Q2 2024 Consumer Pulse Study, 91% of consumers believe that access to credit is important, with Gen Z consumers’ top three anticipated new credit products in the next 12 months being personal loans (35%), credit cards (26%) and student loans (25%) – all considered entry-level products.

“Growth in new credit products issued and use of existing credit is typically driven by economic requirements as consumers take on credit to boost their available income during challenging economic times,” said Lee Naik, CEO of TransUnion Africa. “However, there is hope on the horizon as inflation decreased during the quarter, with annual food price inflation at its lowest since late 2020^[3]. Consumers are likely to see further respite in the coming months, along with the reduction in interest rates this combination will likely provide relief to stretched household budgets.”

Table 1: Summary of Q2 2024 Metrics for Major Consumer Credit Products  

*Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears

** Includes both bank-issued, and non-bank issued personal loans 

Lower amount personal loans drove significant growth

Personal loan originations increased by 16.7% YoY during Q2 2024, accounting for 77% of all new credit originations. Over the same period, the average new loan amount declined by 14.2%, suggesting that lenders were willing to offer modest amounts as they balanced portfolio health and rising demand from consumers. A deeper exploration over the last 12 months of originations shows that the vast majority of new personal loans were granted for amounts less than R5,000, comprising 75% of new loans granted during Q2 2024 – an increase from 73% of loans during the same quarter of 2023. During Q2 2024, 3.2 million consumers opened new personal loans for R5,000 or less, compared to 1.9 million consumers during the same quarter in 2023.

Lenders are understandably examining risk profiles more closely. During Q2 2023, 77% of consumers who opened personal loans under R5,000 held a below prime^[4] risk profile, and this proportion decreased to 74% during the same quarter in 2024. During Q2 2023, 90% of loans of R5,000 or less were granted by non-bank lenders, compared to 86% during Q2 2024. Over this time, 10% of these loans were granted by bank lenders in Q2 2023, compared to 14% in 2024. These trends clearly indicate that lower amount loan seekers are driving growth in account volumes for both bank and non-bank personal loan lenders.

Throughout this period, account-level delinquency rates improved by 240 basis points YoY to 32.6%, demonstrating that lenders’ more cautious risk management has helped reduce delinquency, while supporting consumers in managing their debt levels. Demand for personal loans is likely to remain strong, with 33% of consumers responding to the Consumer Pulse Survey saying that they intend to apply for a new personal loan in the next 12 months – more than any other credit product.

Credit card growth led by Gen Z, primarily those opening their first credit card in wallet

Credit card originations increased by 9.3% YoY, with Gen Z credit cardholders having grown by 22.7% YoY. Millennials and Gen X consumers contributed 72% of credit card originations during Q2 2024, with below prime growth at 12% YoY, compared to prime and above growth at 10% YoY.

Findings of a recent study of TransUnion’s South African credit card population showed that while credit card growth has primarily been driven by existing cardholders during Q1 2023, meaning consumers who already have one or more cards and are opening additional new cards, the number of first-time credit cardholders is rising at a fast pace. In the most recent quarter, 38% of originations were issued to first-time cardholders – the highest proportion observed since Q1 2020.

The study further showed that consumers holding their first-ever credit card are well disciplined in managing their credit card payments, with those who opened their first credit card in recent vintages showing healthy performance trends, especially when compared to those opening additional credit cards.

Table 2: New-to-Card Compared to Existing Cardholders Delinquency,

90 Days Past Due After 12 Months on Book

“Opportunity exists to enable greater access to financial inclusion by getting the first credit card into a consumer’s wallet,” said Naik. “Our research shows that first-time cardholders are disciplined in managing their payments, as they focus on building their credit profile while accessing the opportunities made possible by having access to credit cards.”

Mortgage growth continued the momentum, particularly in the more affordable housing sector

Despite the sustained high interest rate during Q2 2024, mortgage originations continued to grow – by 16.2% YoY, and the average new loan amount increased by 1.7% to R940,675.

During the first half of 2023, 32% of mortgages were granted to subprime and near prime consumers, and this ratio increased to 36% of mortgages being granted to below prime risk tiers during the first half of 2024. Mortgages granted to super prime borrowers declined from 41% in the first half of 2023 to 37% during the first half of 2024.

“The growth in mortgages in the affordable housing bracket and the increase in mortgages granted to below prime borrowers seem to highlight banks’ intent to support South Africans in their quest to own property,” Naik said. “We also note that while there’s been growth in originations, the rate of growth has also increased substantially, which may in turn indicate increased homeowner confidence, supported by banks’ confidence in the country’s property market and in their risk strategies to accommodate more lenders.

“South Africans are managing their credit portfolios, despite the challenging economic environment during the second quarter of the year,” Naik added. “Lenders would serve their customers well by offering comprehensive financial literacy programs throughout the customer journey, and not just at origination. Collaborating with allied partners who can help consumers understand more about how risk is measured, and how risk scoring is used in decision making around credit would further support consumers in managing their finances more efficiently.”

^[1] In comparison, 88% of credit active Canadians hold credit cards, 81% of people in the United States of America hold active credit cards, and 62% of consumers in the United Kingdom hold credit cards.

^[2] Gen Z born 1995 to 2010. Millennials born 1980 to 1994

^[3] Consumer inflation slows in June | Statistics South Africa (statssa.gov.za)

^[4] Subprime 0-625; Near prime 626-655; Prime 656-695; Prime plus 696-720; Super prime 721–999

Under-pressure South Africans are shopping around for the best deals for car- and homeowners insurance, with 59% saying that they had shopped around for better car insurance in the last six months, and 41% saying that they intended to do so in the next six months, according to the first TransUnion South Africa Insurance Trends Survey.*

The survey found that more than half (55%) of respondents switched car insurance providers once they had shopped around, highlighting a vulnerability for insurers. Cheaper premiums were the leading reason for switching (41%), with this trend being most pronounced among 59% of 46-75-year-olds, indicating a strong cost-sensitivity among this group.

However, nearly one quarter (23%) of respondents switched providers because their new insurer offered better coverage, reflecting a significant demand for more comprehensive insurance options, while 15% switched for anticipated better customer service.

Loyalty was the primary reason 24% of respondents chose not to switch car insurance providers, particularly among 46–55-year-olds where the rate was 38%. This indicates a strong sense of brand allegiance within this age group, likely due to long-term relationships and satisfaction with their providers.

Additionally, 21% of respondents stayed with their existing providers because of lowered premiums, suggesting competitive pricing strategies effectively retain customers. This is particularly noteworthy in the highly price-sensitive car insurance market.

“These insights highlight the critical areas that insurers must focus on if they are to attract new policyholders, and to retain their existing customer base,” said Schalk Fischer, Insurance Vertical Sales Leader at TransUnion Africa. “Competitive pricing, comprehensive coverage, and exceptional customer service are consumers’ leading priorities, and insurers can help them overcome their current financial pressures by seizing the opportunity to engage with them through innovative, tailored products. These could include flexible offerings such as usage-based insurance, which could help address financial strains and prevent insurance gaps that expose consumers to risk.”

The method of obtaining car insurance quotes varied significantly among surveyed consumers, and customer service/call centres emerged as the preferred channel with 46% of respondents choosing to speak to a consultant. Interestingly, this method was particularly favoured by older adults aged 66–75, with a notable 53% preference rate among this demographic, emphasizing a preference for personalised assistance and guidance in insurance matters.

Insurance company websites were also a popular choice: 44% of respondents reported using this method.

Websites were most popular among younger adults aged 25–35 where the adoption rate soared to 53%, reflecting their comfort with digital platforms for managing insurance needs and seeking information independently.

Comparative quote websites were the next most popular choice at 41%, with 43% of people aged 25–45 preferring these platforms. This demographic’s preference suggests a shift toward online offerings that facilitate comparison shopping for car insurance policies and offer transparency and ease in comparing insurance policies. It highlights a growing preference for digital convenience when shopping for insurance.

Policyholders slightly less likely to switch their homeowners’ policy

Survey respondents who shopped around for homeowner’s insurance were less likely to switch providers than those who shopped for a new car insurance provider. More than half (57%) chose to stay with their incumbent insurer, likely due to being satisfied with their current coverage, or reluctance to navigate the complexities of switching.

Of the 43% who switched providers, the primary motivation was the pursuit of cheaper premiums, as cited by 37% of respondents across all age groups, although 31% of switchers prioritised obtaining better coverage, suggesting a preference for policies that offer comprehensive protection and peace of mind.

Among those consumers shopping for an alternative homeowner’s insurance provider, 45% favoured customer service call centres, suggesting a significant reliance on direct communication and assistance, and a preference for personalised service and advice. Comparative quote websites were the preferred avenue for 43% of respondents, with these likely to be more tech-savvy consumers, while 42% (particularly 25-55-year-olds) used insurance company websites or mobile apps, underscoring a demand for accessibility an ease of use.

With similar-size groups showing preferences for diverse platforms, it’s clear that insurers need to offer diverse channels and personalised approaches in the homeowners insurance market.

“The cost-of-living crisis is reshaping consumer spending habits and significantly affecting the insurance

sector in South Africa, and rising insurance premiums during these periods have led many customers to worry about their abilities to continue making payments,” said Fischer. “To manage escalating expenses during inflationary and low-growth periods, insurers often raise premiums, which can further reduce policyholders’ spending power. Consequently, consumers with already tight budgets may scale back on non-essential insurance coverage or switch to providers with lower premiums. Insurers must balance necessary price increases with the risk of losing customers, carefully managing premium adjustments to mitigate customer attrition.”

For more information click here to visit our industry page.   

*TransUnion’s Insurance Trends Survey is an online survey conducted from 7 to 15 May 2024 among 1,000 South African respondents 25+ years old, screened for ownership of vehicle insurance (current or in the six months prior to the survey), and who have shared or sole insurance decision-making responsibilities. TransUnion partnered with a third-party research provider, Dynata, using an online research panel method across a combination of desktop, mobile and tablet devices. These research results are unweighted and statistically significant at a 95% confidence level within ±3.1 percentage points based on a calculated error margin for a sample size of 1,000. Please note some chart percentages may not add up to 100% due to rounding or multiple answers being accepted.

Despite increasing optimism about household finances and repaying their debt faster than a few months ago, South African consumers are becoming more concerned about the rising cost of housing. This is according to the latest Consumer Pulse Study for Q3 2024¹, published by information and insights company, TransUnion.

With the local economic environment showing signs of stability and GDP growth projected at 1.3%² this year, there is a sense of cautious optimism, particularly after inflation settled at a three-year low of 4.6%3 in July 2024. Most economists are expecting an interest rate cut before the end of the year suggesting that there is reason for a more positive approach to the market.

According to the TransUnion study, 76% of consumers expect their incomes to increase over the next year, up from 70% in the same quarter last year. Furthermore, 73% of consumers are optimistic about their household finances for the next 12 months, a seven-percentage point increase year-over-year (YoY). In the three months prior to the Q3 survey, 39% of South Africans reported an increase in their incomes, compared to 36% in the same quarter last year.

"Even though increasing consumer optimism is a promising indicator of economic recovery, it is essential not to diminish the financial challenges that many South African households continue to face,” said Fatgie Adams, Head of Credit Risk Solutions at TransUnion Africa.

Some of households’ most significant financial concerns over the next six months include inflation for everyday goods (38%) and jobs (20%). Housing prices remain a concern for 12% of consumers, a three-percentage-point increase from the previous quarter. This underscores the complexities of the local economic market, particularly around consumers’ access to affordable housing and mortgages while maintaining the financial capacity to service debt.

"While the easing of inflationary pressures and potential interest rate cuts provide a glimmer of hope, the rising cost of housing remains a significant concern for many South Africans,” says Adams. “Our latest Consumer Pulse Study highlights that even as household income expectations improve, the affordability of housing continues to be a critical issue that requires attention.”

Financial challenges persist

Despite growing optimism, many consumers report struggling with their financial commitments. The study found that 36% of consumers do not expect to be able to pay at least one of their current bills and loans in full, a small improvement from 37% in Q2 2024 and 38% YoY. Among those who said they’d be unable to pay at least one of their current bills and loans in full, 38% indicated that they intend to pay a partial amount that they could afford, but not the whole balance. Others said they would pay their current bills and loans by borrowing from a friend or family member (24%), while a small group (9%) admitted they did not know how they would pay their bills or loans.

"Our findings show that while some consumers are seeing income growth, the struggle to meet monthly obligations is still very real for more than a third (36%) of the respondents," says Adams. "This indicates that economic recovery is uneven and that many households are still operating under significant financial stress."

Regarding household spending, the study revealed that just over half of consumers (52%) said they’ve cut back on discretionary spending, such as dining out, travel, and entertainment in the past three months. Additionally, a considerable number of consumers (28%) reported cancelling subscriptions or memberships in that time period.

Access to credit considered to be important

The study also sheds light on the perceived importance of credit and lending products.

Most of the consumers surveyed (92%) believe access to credit and lending products is important to achieve financial goals. Despite this, only a portion (36%) of respondents plan to apply for new or refinance existing credit within the next year. Interestingly, more than half of consumers (51%) have considered applying for new credit or refinancing but ultimately decided against it. The main reasons given include the high cost of new credit or refinancing (31%), fears of being rejected due to their income or employment status (29%), no longer needing the credit (26%), and concerns over their credit history potentially resulting in a rejection (25%).

Most consumers regularly monitor credit

Monitoring credit reports is also a focal point for South African consumers. More than half (54%) said they check their credit report at least monthly, although a smaller portion (17%) said they don’t monitor their credit report at all. There is a strong sentiment among consumers that it is extremely or very important (69%) to monitor their credit report. Interestingly, when asked if their credit score would change if businesses used alternative data sources typically not included in standard credit reports such as rental payments, gym membership payments and short-term loans, responses varied. The majority (50%) of consumers believe their score would increase, others think there would be no change (25%), and the smallest percentage feel their score would decrease (10%). The other 15% of respondents are unsure what would happen.

"Regularly monitoring credit reports is a critical step for consumers to take control of their financial health," Adams explains. "Understanding your credit status allows you to make informed decisions and plan effectively, especially in today’s dynamic economic environment."

Rising fraud risks

Identity risks continue to be a concern for South African consumers. The study found that among the 60% who said they’ve been targeted with an online, email, phone call or text messaging fraud attempt in the last three months, 34% reported being targeted by phishing schemes, up from 28% in the previous quarter. Similarly, there has been a 12-percentage point rise to 32% in vishing schemes (fraudulent phone calls that try to trick people into revealing data).

Consumers are eligible to receive one free credit report every 12 months. Consumers can get their free annual credit report from TransUnion here.

ENDS

¹The survey of 952 South Africans 18 years of age and older was conducted 16–31 July 2024 by TransUnion in partnership with third-party research provider, Dynata.

² https://www.afdb.org/en/countries/southern-africa/south-africa/south-africa-economic-outlook

³ South Africa Inflation Rate (tradingeconomics.com)

South Africans monitor their credit profiles and scores for a variety of reasons, with more than half of South Africans (51%) doing so with the goal of improving their credit score. Almost three in ten of South Africans (29%) monitor their credit report with the goal of paying down debt and preventing fraud activities, while 20% do so in anticipation of opening new credit accounts. These are some of the findings of a new TransUnion global study that set out to better understand the distinct profiles, motivations and outcomes of credit monitoring consumers.

TransUnion conducted a global research study examining credit behaviours for millions of consumers in both developed and developing markets – South Africa, Brazil, Canada, Chile, Colombia, the Dominican Republic, Guatemala, Hong Kong, India, Philippines, the United Kingdom, and the United States. To further identify how these benefits advance credit education and enable financial inclusion, the study used depersonalised credit data to analyse these outcomes for key consumer credit segments: New-to-Credit, underserved, and credit served consumers.

“Consumer credit monitoring has expanded considerably in awareness and usage over the past decade. This expansion was fuelled by the impact of the pandemic on consumer finances, the current high-interest rate, high inflation environment, and consumers’ heightened awareness of taking steps to avoid becoming victims of credit fraud,” said Nidhi Verma, co-author of the study and head of international research and consulting at TransUnion. “Our study measures the importance of credit education and quantifies the benefits that credit monitoring consumers experience. These benefits are shown to lead to better credit profiles, greater access to credit, or an improved ability to pay down debt, depending on the intent of consumers who monitor credit.”

In South Africa, 85% of surveyed consumers stated that it is at least moderately important to monitor their credit, with more than a third (36%) saying it’s extremely important. This finding demonstrated that consumer awareness of credit monitoring is high and is a likely driver behind the surge in monitoring activity in recent years.

TransUnion surveyed consumers to understand their initial intent to sign up for credit monitoring services, and the actual benefits they have experienced in doing so. The most common reasons South African consumers initially signed up for credit monitoring services were that they were trying to improve their credit score (47%), to learn about credit offers they may qualify for (33%), and to monitor their report for accuracy (31%).

Additionally, after using monitoring services for some time, consumers reported realising added benefits. These include that credit monitoring has allowed them to learn how to monitor and manage their credit score (55%), make regular payments (42%), and pay down debt (34%).

The study further identified three distinct segments of credit monitoring consumers based on their primary motivation for monitoring their credit. These include Credit Improvers, Credit Seekers and Credit Managers.

Credit Improvers benefit from improving scores and staying current on obligations

Credit Improvers, who make up 51% of the South African credit monitoring population, are defined as consumers with subprime (poor) credit scores who likely use credit monitoring to understand their current credit situations and take steps to improve their credit scores. The study found that Credit Improvers in South Africa generally experienced larger credit score improvements one year after they started monitoring their credit than consumers who have no history of credit monitoring.

In addition to improving scores, credit monitoring subprime consumers are looking to improve their delinquencies, by better understanding their obligations and how their payments impact their credit scores. With that in mind, TransUnion found that those who monitor credit cured their delinquent credit card accounts – meaning they improved their account status from past due to current – at a three percentage points higher rate than those who do not monitor credit. This improvement in cure rates was observed amongst consumers who were delinquent before signing up for self-credit monitoring and subsequently became current on their overdue payments within the first three, six, or 12 months of monitoring credit.

Consumer-level Delinquency Cure Rates One Year After Starting Credit Monitoring

* Non-monitoring consumers were analysed over the same time period from the date when credit monitoring consumers with similar credit profiles began monitoring services  

“The volume of South African consumers enrolled in credit monitoring tools for the first time with TransUnion (NYSE: TRU) has been growing steadily for years,” said Lee Naik, CEO TransUnion Africa. “Credit Improvers are the largest segment of credit monitoring consumers in South Africa and tend to see some of the most impactful benefits in terms of credit profile improvement. It’s a clear indication that those consumers who are actively looking to improve their credit standing may achieve better results if they monitor their credit and are able to plan their financial obligations and track their progress.”

Credit Seekers benefit from attaining new credit

One fifth of the South African credit monitoring population (20%) do so with a goal of attaining new credit. Credit Seekers are consumers with near prime and above credit scores who monitor their credit with the intention of opening new credit accounts in the near future. When comparing Credit Seekers who monitor their credit to those who do not, credit monitoring consumers open 1.11x more credit accounts, such as credit cards and vehicle finance loans, over the following year.

New-to-Credit (NTC) consumers – those early in their credit journeys – saw similar higher activity for the credit monitoring segment. NTC consumers who monitor their credit display 1.22x higher origination rates (opening new credit products of any type) compared to those with no history of monitoring their credit. “For New-to-Credit consumers, who typically have a more difficult time expanding their credit wallets, credit monitoring can be a crucial enabler of greater credit education and access,” said Naik.

Percent of Consumers Originating a New Bank Personal Loan within One Year of Starting Credit Monitoring

* Non-monitoring consumers were analysed over the same time period from the date when credit monitoring consumers with similar credit profiles began monitoring services  

Credit Managers benefit from paying down debt and detecting fraud

The study found that many South African consumers (29%) monitor their credit with the intention of keeping an eye on their overall balances and credit health. Credit Managers are defined as consumers with near prime and above credit scores who generally monitor their credit with the goal of reducing or maintaining their balances and/or monitoring for fraud. When surveyed, 34% of all South African credit monitoring consumers said monitoring their credit had helped them pay down debt.

“Even though we are in a high-interest rate environment with consumers leveraging credit to make everyday purchases, it’s reassuring to see so many South Africans taking the initiative to ensure they are paying down or managing their debt levels, and that credit monitoring plays an important role in achieving that goal,” added Naik.

Another primary motivation reported by Credit Managers is protecting themselves against fraud. More than one third (35%) of South African consumers reported that they continue to use credit monitoring services over time to detect and protect against fraud. This benefit is of increased importance to consumers considering the continued rise in fraud activity that has been observed since the onset of the COVID-19 pandemic.

Free credit monitoring benefits consumers and lenders

To help more consumers easily access their credit scores, many financial institutions offer free credit monitoring tools. This easy access not only helps consumers but enables lenders to build stronger relationships with their customers.

Nearly four in ten (38%) consumers said that they would prefer a lender that offered free credit monitoring, and 48% said that they would continue to bank with this lender. Over one quarter (27%) said they would prioritise payments to that lender over other lenders’ payments.

“Consumers now expect financial institutions to offer free credit monitoring services, as it provides them the tools to improve their credit profiles, better manage existing credit, and seek new credit in the future. Offering such services clearly benefits financial institutions as many of their customers are more likely to remain loyal to them for future credit activity,” concluded Naik.

For more information about TransUnion’s global credit monitoring study, click here. Consumers interested in obtaining their TransUnion credit report, credit score, and accessing additional credit planning tools can visit here. Learn more about how TransUnion helps individuals and families protect against identity theft here.

-        ENDS-

Note to editors:

For the purposes of this study, TransUnion defined a consumer as self-monitoring their credit if they checked their credit report at least once during the study timeframe. Our study measures South African consumers who started monitoring their credit for the first time between June 2021 and December 2022 as our primary study population.

^[1] A new-to-credit consumer is one with no prior credit history on their credit bureau file who opened their first-ever traditional credit product such as a vehicle loan, credit card or other product unique to their region.

^[2] Underserved consumers are defined as any person who has two or more years of credit experience, but no more than 2 currently open accounts of one product type ever.

^[3] Served consumers are those who are credit-visible, active consumers who have two or more years of credit history, currently have three or more credit accounts open, or have had two or more different credit product types currently or in the past.

According to TransUnion’s (NYSE:TRU) Q1 2024 South Africa Industry Insights Report, consumers’ credit appetite continued to grow despite the sustained high interest rate environment, as consumer confidence improved slightly^[1] during this quarter, along with lower inflation metrics in January and March. Originations – a measure of new accounts opened – saw the strongest Q1 2024 year-over-year (YoY) growth in personal loans – up by 20%. This was the third consecutive quarter in which personal loans growth outpaced other consumer credit products.

Over the same period, retail instalment loan originations increased by 10%, and the average new loan amount increased by 14.5%.

Originations growth across consumption-led products was largely driven by Gen Z (born 1995 – 2010), especially as this youngest generation takes a bigger role in contributing to the labour market and credit economy.

 Table 1: YoY Growth in Originations: Consumption-led Credit Products (Q1 2023 vs Q1 2024)

 * Inclusive of both bank-issued and non-bank-issued personal loans

While clothing account originations volumes increased by 3.1% YoY, the average new clothing account limit increased by 27.8% YoY, leading to outstanding balances growth of 10.6% YoY. The significant increase in account limits indicates that lenders are responding to consumers’ demand for more liquidity as they seek access to credit to fund their needs for the myriad of items available via clothing accounts, including mobile devices and electronics, appliances and homeware.

Growth observed in the clothing account market has been amplified by consumers facing higher living costs, which are increasing at a faster pace than their income, especially as inflation remains on the higher end of the Reserve Bank’s targeted range of 3% to 6%.

According to TransUnion’s Q2 2024 Consumer Pulse survey, 77% of consumers said that one of their three biggest concerns was inflation for everyday goods such as groceries and fuel, with 55% saying that they were worried about interest rates and 52% saying that they were concerned about jobs.

“South African consumers remained resilient through the first quarter of 2024, keeping up with their payments and leveraging their access to credit to maintain liquidity,” said Lee Naik, CEO of TransUnion Africa. “Lenders seeking to maximise opportunity in the current economic environment will win the loyalty of resilient consumers by offering agile financial solutions that provide flexibility for their consumption needs.”  

Demand for home loans stayed strong

The volume of home loan originations increased by 6.7% YoY in Q1 2024, although average new loan amounts decreased by 6.2% over the same period, indicating an uptick in the more affordable sectors of the South African property market, driven in part by first-time home buyers. This is supported by a 9% YoY growth in the number of below prime^[2] home loans being originated during Q1 2024, while new home loans in prime and above risk tiers fell by 10% YoY. Furthermore, the quarter saw a 32% YoY growth in originations among Gen Z consumers, resulting in this group holding 9.2% of new mortgages.

According to a recent report^[3], affordable housing accounted for 36% of property sales in 2023, with this segment representing 50% of registered properties valued at R750,000 or less.

While new loan amounts have shrunk, total outstanding home loan balances increased by 7.6% YoY, implying that existing home loan borrowers are leveraging their home equity for liquidity. Consumers are likely drawing on their existing home loans due to more favourable interest rates relative to the cost of new credit issuance across consumption-led products. Simultaneously, home loan delinquencies deteriorated by 140 basis points YoY, alerting lenders to adopt a more active approach to anticipating and managing delinquencies that may arise from consumers who may be experiencing a payment shock due to high interest rates.

South Africans continued to demonstrate resiliency

Despite the uptick in home loan delinquencies, and a more muted uptick in vehicle finance delinquencies, South African consumers’ credit performance for consumption-driven products improved during Q1 2024, with delinquency rates improving across all unsecured credit products.

Table 2: Summary of Q1 2024 Metrics for Major Consumer Credit Products  

*Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears

** Includes both bank-issued, and non-bank issued personal loans 

Lenders appear to be prioritising lower-risk consumers for personal loans, with the number of loans granted to consumers in the prime and near prime risk tiers having increased by 5.5% YoY, continuing a trend for the third consecutive quarter. This lender focus on lower-risk personal loan borrowers has likely driven the 250 basis point YoY improvement in delinquencies for this product. Credit cards continue to attract the digital natives, i.e. Gen Z consumers, seeking convenience and liquidity, who are prioritising their payments on their cards in order to maintain credit access, contributing to improved portfolio performance.

“Within South Africa’s financial landscape, lenders must navigate a delicate balance between finding opportunities for growth and extending financial inclusion to consumers and managing the emerging risks in the current economic climate,” said Naik. “Many consumers also face the challenge of leveraging the credit available to them so that they can meet their consumption needs and improve their living standards, while managing their commitments responsibly. To drive sustainable and smart growth, lenders need to leverage enhanced credit and alternative data to find and fund good consumers, predict delinquencies early and build consumer trust.” 

^{[1] South Africa Consumer Confidence (tradingeconomics.com)}

^{[2] Scores are based on TransUnion’s CreditVision® generic scoring methodology. Risk distribution key: subprime (0-625), near prime (626-655), prime (656-695), prime plus (696-720), super prime (721-999).}

^{[3] The evolving landscape of affordable housing in South Africa | MyProperty}

The South African automotive sector continues to grapple with significant macroeconomic challenges. Persistently high interest rates and negative GDP growth have eroded both consumer and business confidence, leading many to defer long-term financial commitments, including vehicle purchases. Announcing TransUnion’s Q1 2024 Vehicle Pricing Index (VPI) this week, TransUnion Africa CEO Lee Naik says that this cautious sentiment is expected to persist.

“Consumers are showing hesitation almost across the board. Even as consumers await economic stability and post-election clarity before making major asset purchases, those who purchased vehicles post-2021 have not yet reached a point where their loan balances can be offset by the trade value of their vehicles, and we also see consumers who opted for high balloon payments at the point of purchase holding on to their vehicles for longer.”

NAAMSA data for Q1 2024 reveals significant shifts in the vehicle finance landscape: the sale of new passenger vehicles, and the total number of vehicles that were financed in the period, decreased by 8.4% and 10.6%, respectively, compared to Q1 2023. This is despite relatively low comparative price increases of 4.7% for new vehicles (compared to 6.3% in Q1 2023) and 2.1% for used vehicles (8.3% in Q1 2023), according to the Q1 2024 VPI.

While overall sales volumes remain low across both used and new vehicles, TransUnion VPI data shows that the used-to-new ratio of financed vehicles has shifted from 1.86 in Q1 2023 to 1.15 in Q1 2024, indicating a growing preference for new vehicles among buyers entering the market, likely driven by these smaller price hikes in conjunction with incentives being offered by dealers.

The average loan value for financed vehicles increased to R391,000 in Q1 2024, up from R387,000 in Q1 2023. However, this increase remains below the inflation rate for both new and used vehicle prices, as well as the Consumer Price Index (CPI). “Nominal loan amounts have grown but are not keeping pace with rising vehicle costs. This reflects both a decrease in disposable incomes and a diminished appetite among consumers for taking on expensive new credit responsibilities,” says Naik.

Consumer buying patterns show that a growing number of households are opting for one multipurpose vehicle instead of maintaining multiple vehicles, with many substituting their transport demands with ride-hailing services like Bolt and Uber. Subscription services are also playing a role in helping consumers who have been precluded from longer-term traditional finance products.

Despite the challenges, the Q1 2024 VPI highlights opportunities for financial inclusion among individuals previously excluded from credit markets. “We see opportunities to leverage inclusive finance strategies to expand credit access to underserved markets. By interpreting the available data to present innovative financial products to underserved consumers, the industry can potentially increase the volume of financed vehicles and stimulate market growth.”

The index also suggests that there are opportunities for financiers to target consumers who may be looking to refinance their existing vehicles, while insurers can better manage their risks by re-assessing the value of their customers’ vehicles.

“The South African vehicle market is navigating a complex economic landscape resulting in modest shifts in consumer behaviour and market dynamics. This environment is expected to keep vehicle sales suppressed until greater economic stability and consumer confidence return. The ability to innovate, enhance financial inclusion, and adapt to the evolving mobility landscape remain crucial for achieving sustainable growth in the industry,” concludes Naik.

//ENDS//

Notes to Editors:

The TransUnion Africa Vehicle Price Index (VPI) measures the relationship between the increase in vehicle pricing for new and used vehicles, and uses vehicle sales data collated from across the industry.

Our VPI now includes data on new vehicle asset financing from SACRRA. SACCRA data is made available to the industry at the end of a quarter for the preceding quarter. Going forward, TransUnion’s SA VPI will be released in the third month of the following quarter.    

Information and insights company TransUnion, has published its Consumer Pulse Study for Q2 2024 showing that while there is an air of optimism carrying through from Q1 2024, South African consumers continue to navigate financial uncertainty.

While economic conditions were uncertain, 72% of South African consumers expect their incomes to rise in the next 12 months, just four percentage points down from Q1 2024. However, 77% of consumers see inflation for everyday goods as their top financial concern. Despite a slowdown in inflation, to 5.2% in April 2024, the rate remains above the South African Reserve Bank’s midpoint range of 4.5% and the expectation amongst many economists is that it is set to remain high for the foreseeable future. Interest rates (55%) and job security (52%) are consumers’ second and third top financial concerns, according to the study.

Edgar Tshabalala, Senior Manager: Research and Consulting, Financial Services at TransUnion South Africa, says: “Consumers are cautiously optimistic about their future incomes, but the underlying economic volatility, and the cost of living, continue to pose significant challenges.”

Income trends and consumer optimism

South African households experienced varied income trends in Q2 2024. While 39% reported increased incomes – two percentage points up from Q1, 40% of consumers saw no change, while 21% faced a decline in income.

In line with the expected and actual income increases, 71% of consumers are optimistic about their household finances over the next 12 months and 63%, predominantly Baby Boomers (age 59 and above) and Gen Z (18–26 years old), are confident about their ability to meet their debt obligations. However, 37% anticipate difficulties in servicing their current debt commitments, particularly among the Gen X (43–58 years old) and Millennials (27–42 years old) demographics. In a show of financial prudence, 30% of respondents opted to pay down their debt faster in the last three months. At the same time, 26% opted to save more in an emergency fund or stokvel, and 20% saved more for their retirement.

Financial strain is impacting discretionary spending, with 38% planning to allocate more funds to bills and loans over the next three months, and many intending to cut back on non-essential expenditure such as travel, dining out, etc. (net 22% planned to reduce spending), in-store or online shopping (net 5%), and large purchases like appliances or cars (net 7%).

Credit and financial inclusion

Access to credit is accepted as being crucial for financial inclusion and economic participation, with 91% of consumers acknowledging its importance. However, only 38% feel that they have sufficient access to credit, led by Millennials at 47%.

While 41% of Gen Z said they plan to apply for new credit or refinance existing credit in the next year, only 32% of this cohort believe they have sufficient access to credit. Among them, 35% are looking at personal loans, 26% at credit cards, and 25% at student loans. “All of these are considered entry-level credit products, and suggest low credit product penetration in this entry-level population in the credit market,” says Tshabalala.

In the quarter, 49% of consumers intended to apply for credit but did not follow through. The reasons varied, with the top reasons being: the cost of financing credit is too high (29%); decided didn’t need new credit (26%); believed application would be declined due to income and employment status (25%) and believed application would be rejected due to credit history (23%). The consumers who believe the cost of financing is too high is largely driven by Baby Boomers (45%), Millennials (32%), and Gen X (30%).

Monitoring credit reports

The study shows that 93% of consumers deem it essential to monitor their credit reports, with more than half (56%) accessing their reports monthly. This practice is prevalent among Gen Z (66%) and Millennials (65%). Consumers believe that incorporating alternative data, such as rental payments and buy now, pay later loans, into credit reports could improve their credit scores.

Fraud and consumer education

Fraudulent activities remain a significant concern, with 49% of consumers targeted by schemes but did not fall victim in Q2 2024. One in 10 (10%) consumers were targeted and fell victim to fraudulent schemes, and another 41% were not aware of fraudulent schemes targeted at them. The primary fraud methods include money/gift card scams (37%), smishing and phishing (31% and 28% respectively), and third-party seller scams on legitimate online retail websites (26%).

Identity theft saw a notable increase during the quarter, affecting 16% of respondents – an increase of seven percentage points from Q1 2024. With this, 89% of consumers reported a concern about the security and privacy of sharing their personal data, overwhelmingly driven by fear of identity theft (75%) and personal invasion of privacy (70%).

“These numbers show how important it is for consumers to monitor their credit records regularly. Early detection of fraudulent activities that affect their credit scores enables consumers to take timely corrective action,” says Tshabalala.

Consumers can get their free annual credit report from TransUnion here.

Note to editors:

Net descriptor indicates percentage of consumers who reported plans to decrease spending from those who reported plans to increase spending.

TransUnion also found across industries in 2023, 4.1% of all transactions where the consumer was in South Africa were flagged as being suspected Digital Fraud – a 27% YoY increase.

The TransUnion report revealed that nearly one in seven (13.5%) newly created accounts are suspected to be created via Digital Fraud globally in 2023, largely driven by bad actors using fabricated or stolen identities. This may indicate a shift in the tactics deployed by fraudsters hoping to engage earlier in the transactional process.

Examples of the types of transactions that take place during the account creation process include account signup, registration and loan origination. Among the industries globally that saw the highest percentage of digital account creation transactions suspected to be Digital Fraud globally in 2023 were retail (44.7%), travel & leisure (36.0%), and video gaming (31.5%).

“This early phase, new account Digital Fraud may represent a paradigm shift of sorts among fraudsters globally,” said Amritha Reddy, Senior Director for Solutions at TransUnion South Africa. “In lieu of using traditional tactics to gain access to and ultimately compromise existing accounts, they are increasingly choosing to create new accounts that they can control themselves.”

In contrast, for transactions where the consumer was in South Africa, the highest percentage of suspected Digital Fraud in the online customer journey occurred at account login, at 5.5%, varying widely by industry.

Retail Saw the Highest Suspected Digital Fraud Rate in 2023 Globally, Telecommunications Experienced the Highest Suspected Digital Fraud Rate in South Africa*

Source: TransUnion TruValidate™

The study found that 5% of all global digital transactions were suspected to be Digital Fraud in 2023, with the volume of risky transactions up 14% YoY and 105% from 2019 to 2023. This growth continues to outpace the growth in digital transactions, which rose 90% from 2019 to 2023.

Globally, retail surpassed gaming as the industry seeing the highest rate of suspected Digital Fraud in 2023 at 8.7%, up 21% YoY. In addition, the telecommunications industry saw a 111% YoY increase in the suspected Digital Fraud rate, up to 4.5%.

“Fraudsters are constantly seeking and finding different entry points across all industries,” Reddy said. “Businesses need to stay alert and apply solutions that protect the consumers they serve, and themselves, against evolving fraud trends and methods.”

TransUnion came to its conclusions about Digital Fraud based on intelligence from its identity and fraud product suite that helps secure trust across channels and delivers efficient consumer experiences – TransUnion TruValidate. The rate or percentage of suspected Digital Fraud attempts reflect those that TransUnion customers determined met one of the following conditions: 1) denial in real time due to fraudulent indicators, 2) denial in real time for corporate policy violations, 3) fraudulent upon customer investigation, or 4) a corporate policy violation upon customer investigation —compared to all transactions assessed.

The report’s findings are based on proprietary insights from TransUnion’s global intelligence network, and includes data from South Africa, Botswana, Brazil, Canada, Chile, Colombia, the Dominican Republic, Hong Kong, India, Kenya, Mexico, Namibia, the Philippines, Puerto Rico, Rwanda, Spain, the United Kingdom, the United States and Zambia.

For more information and insights about the global fraud trends download the TransUnion 2024 State of Omnichannel Fraud Report.

*Some industries were excluded from the South Africa study due to a lack of statistically significant data

Global information and insights company TransUnion South Africa is pleased to announce the appointment of Marcia Mayaba as Sales Vice President, Auto Information Services. In her new role, Mayaba will provide strategic leadership in business development for TransUnion’s Auto Information Solutions.

With over 24 years of experience in the South African automotive industry, including roles in truck and car rental, leasing/fleet management, automotive retail, and original equipment manufacturing, Mayaba brings a wealth of expertise to TransUnion South Africa.  Marcia has held various roles in her career ranging from Operational to Executive Leadership with her highest achievement being appointed as the CEO of Barloworld Motor Retail in September 2020. This is where she made history as the first black female CEO in the South African Automotive Retail industry. Mayaba’s passion for advancing women in the automotive sector was highlighted during her tenure as Vice President of the National Automobile Dealers Association, where she spearheaded transformation initiatives. 

"I'm excited to join TransUnion South Africa, contributing to its mission of extending financial inclusion," Mayaba said. "I look forward to bringing my experience in leading strategic sales initiatives and building partnerships to bear for the benefit of TransUnion’s clients as we work together to create innovative solutions that empower businesses and consumers."

Mayaba will lead the sales team, driving the client proposition and servicing model within TransUnion’s auto vertical, and collaborating with product and analytics teams to develop innovative solutions that address clients’ risk management needs. Her strategic vision and industry knowledge will be instrumental in expanding market share, fostering partnerships, and driving engagement.

Dries Zietsman, Chief Revenue Officer of TransUnion Africa, says that the team is delighted to welcome Mayaba, “Marcia’s extensive experience and leadership will strengthen our sales strategy and enhance our ability to deliver value-added solutions to our auto clients,” he said.

Announcing TransUnion’s Q4 2023 Vehicle Pricing Index (VPI) this week, TransUnion Africa CEO Lee Naik said that these challenges have resulted in a notable decline in vehicle sales and financing. While the trend of market contraction is anticipated to persist, manufacturers and dealerships are stepping up to the challenge with efforts to aid consumers to enter or re-enter the auto market.

Innovative actions that manufacturers and dealerships are taking to stimulate growth in the sector include discount structures, incentives, trade assistance, interest rate reductions on loans, and a focus on monthly payments rather than gross prices. “These efforts show innovation in an otherwise stagnant sector,” says Naik.

A significant market trend is the notable increase in the average loan amount for financed vehicles. TransUnion data shows that, in Q4 2023, the average loan value increased to R396,000, up from R386,000 in Q4 2022. This 2.5% average loan value growth comes off the back of CPI of 5.1% in December 2023 and a new vehicle price increase of 6.3% (Q4 2023 vs. Q4 2022). Despite this increase in loan values, there has been an overall reduction in new accounts opened over the last two years, further confirming a decline in purchasing power and volume.

The net effect of these economic markers is that lower net income consumers are being priced out of the market; they either do not qualify for vehicle loans or are unwilling to add a new debt burden to their monthly budgets.  

This is where the industry is evolving to enable economic participation. “Consumers are benefitting from the introduction of new subscription-based and ‘vehicle on demand’ models and services. Renting, station-based car sharing, free-floating car sharing, micro-mobility services, ridesharing, and ride-hailing options are increasingly being brought to market to make transport affordable for consumers, with the end result promoting financial inclusion, furthering economic empowerment, and stimulating economic growth,” says Naik.

The shift in the ratio of used-to-new vehicles being financed, from 1.98 in Q4 2022 to 1.2 in Q4 2023, also signifies a significant change in consumer behaviour driven by factors such as improved new vehicle stock availability, an interest rate that is perceived as being stable, and innovation at dealership level. These factors are leading to consumers increasingly opting for new over used vehicles.

“Overall, the macroeconomic climate remains incredibly challenging for consumers and continues to affect buying power and spending habits. While the data sets in this Index end in Dec 2023, the 2024 market indicators continue to tell a difficult story for the South African consumer – Q1 NAAMSA sales figures remain depressed, and the cost of owning, running and maintaining a vehicle continue to increase, evidenced by another petrol price increase on May 1.  The South African vehicle industry’s ability to adapt and innovate, particularly in embracing new mobility trends, will be essential for sustainable growth,” concludes Naik.

Almost two-thirds (65%) of the households that participated in the survey are confident that they will be able to meet their current bills and loan obligations in the coming three months. The percentage of households that expect to struggle to pay their bills and loans (35%) is seven percentage points lower than in Q4 (42%) and, of these, 34% plan to pay a partial amount that they can afford, 33% plan to take on partial or gig work and 30% plan to use money from savings to help meet their financial responsibilities. Lenders can also expect requests from 12% of this group of borrowers to refinance or renegotiate their current debt payment periods and/or interest rates.

Lee Naik, CEO of TransUnion Africa, says that the households surveyed for this quarter’s study are taking a proactive long-term approach to their financial health. “In addition to a feeling of overall buoyancy, the results show that consumers are responding responsibly to the prevailing macroeconomic factors by prioritising the repayment of existing debt and saving more for both the short- and long-term.”

In all, 37% of respondents who said that the South African economy is in a recession are committed to paying down debt faster, compared to 29% in Q4, and 51% (up from 47% in Q4) are cutting back on discretionary spending to be able to do so. When it comes to savings, 19% of respondents put more into their retirement funding in the past three months, and 28% saved more in an emergency fund or stokvel. These numbers are higher than in Q4 2023, when 18% boosted their retirement funds and 25% put money into savings and stokvels.

Naik also says that consumers’ appetite for new credit facilities is “the highest we’ve seen it since Q4 2020”. A full 38% of respondents plan to apply for new credit or refinance existing credit such as property and car finance, credit cards, and personal and student loans, within the next year.

Further, there is a shift towards looking past the current environment to the long-term, which will be welcomed by the residential property sector, with 21% of respondents planning to apply for a new bond facility.

Credit sentiment

While 56% of South Africans say that they think access to credit and lending products is a ‘very’ or ‘extremely’ important enabler for achieving financial goals, the findings show numerous perceived barriers to access. Of the respondents who considered applying for new credit or refinancing existing credit during the quarter but then decided not to (51%), more than a third (35%) said that the cost of this credit is too high.

Other respondents (15%) were put off by the ‘work’ it would take to answer the underwriting questions, and 10% could not verify their personal information. Another 27% believed that their application would be rejected due to their income or employment status, while 23% felt that their credit history would count against them. When asked whether they believed their credit scores would change if businesses were to leverage information that is not on a standard credit report, like rental payments for accommodation, gym memberships, and ‘buy now pay later’ transactions, 49% agreed.

“These findings present opportunities for lenders to refine their requirements, and to streamline their application processes, as well as to partner with credit bureaus and exchange data in order to offer credit to a larger sector of responsible borrowers,” says Naik.

Digital fraud

With 20% of households having added to their home-based digital services over the preceding quarter, transacting digitally is becoming even more commonplace. However, an alarming number (60%) of South Africans were targeted by an online, email, phone call or text messaging fraud scheme, with 9% falling victim over the same period. Findings show that 34% of consumers were exposed to a money or gift card scam, and 33%, 31% and 27% respectively reporting phishing, smishing and vishing scams (fraudulent emails, websites, social posts, and QR codes; text messages; and phone calls) aimed at tricking them into revealing their personal data. One in ten (10%) reported being targeted by identity theft scams for their personal information, and more than a quarter (27%) encountered third-party seller scams on legitimate online retail websites.

These numbers show how important it is for consumers to monitor their credit records regularly. Early detection of fraudulent activities that affect their credit scores enables consumers to take timely corrective action. The overwhelming majority of surveyed households (93%) realise the importance of checking their credit records regularly, and by far the biggest portion (52%) do so at least monthly.

Consumers can get their free annual credit report from TransUnion here.

According to TransUnion’s (NYSE:TRU) Q4 2023 South Africa Industry Insights Report, the South African consumer credit landscape maintained its resilience during the last quarter of 2023 with a significant 11% overall growth in originations – a measure of new accounts opened – across all products.

The new credit activity growth was led mostly by Gen Z (born 1995 to 2010) and Millennial (born 1980 to 1994) consumers, who together accounted for 61% of new products originated during the quarter. Gen Z represents 15% of the country’s credit active population, having grown by 1.7% YoY as more consumers in that generation reached adult age and entered the credit market.

Table 1: YoY Growth in Originations by Product (Q4 2023 vs Q4 2022)

These insights from TransUnion’s consumer credit database are supported by findings in the Q4 2023 TransUnion Consumer Pulse Report, which highlighted that a high percentage of younger Gen Z and Millennial generations were optimistic about their finances for the subsequent 12 months, at 80% and 77% respectively.

The most significant year-over-year (YoY) growth in originations was in non-retail credit products: personal loan (across banking and non-banking sectors) originations increased by 13.4%, home loan originations increased by 17.5% YoY, and credit card originations increased by 4.3% YoY.

The increase in the personal loan originations was likely driven by consumers’ need for liquidity, as this product provides consumers with cash which can be used for any purpose, including everyday living expenses. Separately, the increase in home loan originations is noteworthy given that it occurred at what is perceived to be a peak in the interest rate cycle, which has potential implications on affordability. This growth in home loans may indicate that consumers are looking past the current environment in their goal of home ownership.

“This shift tells a rewarding story of financial inclusion, as more South Africans have access to the opportunity of investing in their own property. As younger consumers drive the growth in credit economy, it is a great opportunity for lenders to serve their expanding needs and build lifetime relationships,” said Lee Naik, CEO of TransUnion Africa.

Table 2: Summary of Q4 2023 Metrics for Major Consumer Credit Products  

¹ Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears

² Includes both bank-issued, and non-bank issued personal loans 

Delinquencies improved across unsecured credit products, but deteriorated for secured loans

Despite continued macroeconomic uncertainty, consumer-level delinquencies (the percentage of credit-active consumers who are three or more months in arrears on any major lending product) improved YoY by 90 basis points (bps) from 38.5% to 37.6% in Q4 2023. When assessing individual products, delinquencies improved across all unsecured products. However, vehicle finance remained flat YoY and home loans were the only major credit product with deteriorating delinquencies (by 140 bps). This deterioration in home loan delinquencies could be attributed to payment shock – a sudden change in monthly payment obligations caused by external factors – caused by a rising interest rate environment and high inflation, which in turn has led to a higher cost of living and debt.

This is supported by the Q4 2023 South Africa Consumer Pulse Report, in which nearly half (47%) of South Africans said that they had to cut down on discretionary spending, such as dining out, travel and entertainment, due to inflation and other factors. They also planned to spend less on retail shopping and big purchases.

“Many South African homeowners initially faced payment shocks when interest rates escalated during 2022 and 2023, but the subsequent increase in the cost of living due to higher-than-expected inflation has put them under even more pressure,” said Naik. “While most consumers do indeed have the capacity to absorb the payment shock we have seen over the current high interest rate cycle, lenders can take this opportunity to evaluate risks and opportunities for existing and prospective customers’ behaviours across the entire credit wallet, and to offer adequate response strategies for at-risk consumers.

“Lenders should also focus on maintaining loyalty and share of wallet among the resilient consumers in their existing portfolios. Finally, educating consumers on how to best manage payment obligations can help gain lender preference for payments and loyalty during the shifting economic conditions,” he said.

Clothing credit continues its healthy growth trajectory with credit performance improving

In the fourth quarter of 2023, clothing account originations in South Africa maintained their upward trajectory, registering a 6.9% YoY increase in new accounts. This growth aligns with the broader expansion observed in the retail sector for clothing, textiles, and footwear — which rose 2.7%^[1] over the same period. During December 2023, 87.1% of new clothing accounts were opened by subprime consumers – those with the riskiest credit scores – while 12.9% were opened by consumers with better risk profiles. Retail credit accounts, particularly clothing accounts, are typically availed by consumers with riskier credit profiles, who generally have limited access to other credit products and rely on these products to purchase necessary household goods.

Account-level delinquencies across all three retail credit products improved, with retail revolving loans down by 220 bps and retail instalment loans down by 190 bps. These are notable shifts within the high risk and higher-delinquency products, indicating strong consumer performance across the risk spectrum and opportunities for lenders to continue expanding access to these products.

“Despite some economic challenges, the South African consumer credit landscape in the last quarter of 2023 showed positive signs of demand for credit and showed resiliency with majority of the consumers managing their credit better. This bodes well for the continued growth of the country’s credit market,” Naik concluded.

#ENDS

Note to editor: 

* Scores are based on TransUnion’s CreditVision® generic scoring methodology. Risk distribution key: subprime (0-625), near prime (626-655), prime (656-695), prime plus (696-720), super prime (721-999). 

** Unsecured lending products are those where a loan is not tied to an asset. Examples of unsecured lending products include credit cards and personal loans, among others.

^[1] SA retail sales up 2.7% in December - Retail Brief Africa

Immediately after the incident, we implemented a number of improvements following a review we commissioned by a world-leading independent forensics and security firm. We are now implementing the regulator’s additional recommendations and welcome the conclusion of the matter.

Information and insights company TransUnion Africa has promoted Andries (Dries) Zietsman to Chief Revenue Officer. Zietsman’s new role will see him capitalising on his experience within the Financial Services, Emerging Markets, Insurance, Auto, Consumer, and Public Sector verticals.

As part of the TransUnion Africa executive team, Zietsman will lead the go-to-market strategy, helping develop client relationships while delivering on TransUnion’s commitment of using Information for Good^®. TransUnion’s data-led solutions help business succeed by enabling them to make better, more informed decisions in an increasingly digital world where consumers expect smoother and more tailored journeys and experiences.

“Over the last five years, Dries has created exceptional partnerships and delivered tangible economic value to our customers across many of our key sectors. We look forward to his continued contribution to the evolution of our business across the region in his new role,” says Lee Naik, CEO of TransUnion Africa.

Through the power of collaboration and leveraging diversity, Zietsman will help further accelerate TransUnion Africa’s financial inclusion efforts. He brings extensive strategic leadership experience in large, international organisations, including Virgin, Alexander Forbes, British Airways and Mastercard.

After joining TransUnion Africa as a Market Planner in 2018, Zietsman was promoted to Sales Vice President and subsequently led the Strategic Sales portfolio across Financial Services, Diversified Markets, Insurance, and Channel Distribution. These verticals include industries like banking, retail, telco, fintech, public sector, gaming and others.

Zietsman holds an MBA in Business Management Finance from Bond University and has been involved in a number high-profile digital-first projects designed to enable commerce across Africa.

“TransUnion has built significant momentum in implementing and embedding best in class people practices that have contributed to us having high employee engagement and a strong employer brand in the countries we operate in on the continent,” says Ndivhu Nepfumbada, Chief Human Resources Officer at TransUnion Africa. “Our teams in South Africa, Kenya, and the GCC Africa show tremendous affinity for our vision and mission, with the working environment we’ve created forming a solid and powerful foundation for employees to achieve their career goals and dreams.”

The Top Employers Institute assesses HR best practices worldwide and recognises employers that provide employees with the best working conditions and opportunities for personal and professional development. TransUnion is one of a few select companies in 122 countries and regions across five continents to have been certified and recognised since the TEI’s establishment more than 30 years ago. These certified Top Employers positively impact the lives of more than nine million employees all over the world.

TransUnion Africa CEO Lee Naik said that the certification across the Kenya and South African businesses recognises their significant efforts made in not only attracting industry-leading talent, but creating and maintaining working environments where high-calibre individuals feel that they can achieve their potential and make a meaningful difference to the world around them.

“The Top Employers certification process is challenging and thorough, and the outcomes we achieved in the final awards showcase our investment in building and nurturing a highly engaged workforce that is excited about and committed to delivering best-in-class solutions for our customers,” Naik said.

TransUnion GCC Africa is a fully virtual employer that has grown to more than 800 associates in less than three years. “Our unwavering focus on fostering diversity, equity, inclusion and belonging, enables greater opportunities for our associates across Africa. It has attracted a workforce that is more than two-thirds female, and that includes a much larger than legislated number of differently-abled people – most who wouldn’t otherwise be able to contribute to South Africa’s economy in a non-virtual workplace,” said Shobana Maikoo, Head of the GCC Africa.

The TEI programme certifies organisations based on the participation and results of their HR Best Practices Survey, helping them benchmark their performance through interactive feedback sessions and insightful reports. The survey covers six HR domains and includes areas like people strategy, work environment, talent acquisition, learning, wellbeing, and diversity and inclusion.

TransUnion’s newly released Q3 2023 South Africa Industry Insights Report showed a mixed picture of demand and supply across lending products. Consumers generally remained resilient during a quarter when economic indicators such as inflation and the South African Reserve Bank’s repo rate were relatively stable.

Originations – a measure of new accounts opened – saw the strongest Q3 2023 year-over-year (YoY) growth in personal loans (up 7.5%) and clothing accounts (up 11.2%), while new credit card originations declined (down 6.3%) compared to the same quarter in 2022, as did retail revolving loans (down 10.3%) and vehicle loans (down 7.5%).

“Declines in some product originations are likely driven by consumers’ caution in the current high interest rate environment,” said Lee Naik, CEO of TransUnion Africa. “However, the increase in originations among below prime consumers may be a sign of distressed borrowing to meet financial needs.”

Strong growth in retail clothing demand and supply

Strong clothing account originations (up 11.2% YoY) aligned with the broader expansion seen in the retail sector, with sales rising 0.9% over the quarter. This growth was largely driven by increased sales of textiles, clothing, footwear, and leather goods, and is the first increase in the sector since November 2022^[1]. Notably, the average limit on new clothing accounts grew substantially, increasing 43.5% YoY.

In the personal loan sector, non-bank lenders were responsible for 80.4% of new personal loans extended in Q3 2023 – a 2.8% increase from the previous year’s corresponding quarter. Concurrently, the average value of new loans granted overall declined by 21.5% YoY, a trend attributable to the decreasing share of personal loans provided by traditional banking institutions, which focus on consumers with higher credit scores and generally issue higher average opening loan amounts.

Although the total number of active credit cards in market increased, growing 1.3% YoY, origination levels in Q3 2023 were down compared to the same period last year. The findings of the Q4 2023 TransUnion Consumer Pulse Study also revealed that among those South Africans who intended taking out new credit products, 29% said that they were going to apply for a credit card – a decline of seven percentage points from the previous quarter.

Generation Z consumers (born 1995 – 2010) were the only generation in which credit card originations grew by 4.7%, signalling a growth opportunity for lenders intent on building loyalty among younger consumers starting their credit journey.

Consumers leveraged credit at a healthy rate

The third quarter of 2023 saw outstanding consumer credit balance growth of 5.6% YoY, with all financial products contributing positively except for bank and non-bank personal loans, where average balances per account decreased by 3.7% YoY. Average outstanding balances per account for clothing accounts increased by 5.4% YoY, while credit card increased by 7.4% YoY, retail revolving increased by 5.7%, and retail instalment increased by 6.6% over the same period.

This indicates a trend of increased credit utilisation among clothing account holders, which aligns with statements from retailers that have noted an uptick in credit bookings impacting retail sales positively. The balance growth suggests consumers are increasingly leveraging credit to make everyday purchases.

Furthermore, clothing accounts saw significant growth in average new credit limits across risk tiers YoY in Q3 2023. Given that clothing accounts are typically opened by borrowers in below prime risk tiers, this highlights that lenders are feeling more confident in extending credit to riskier consumers. This confidence is potentially driven by the fact that account-level and balance-level delinquencies on clothing accounts showed marginal improvements compared to the previous year, decreasing by 20 and 130 basis points YoY, respectively.

"As South Africans apply for and gain access to credit products, they’re leveraging them effectively to navigate the current challenges of the South African economy,” said Naik. “Continuing to manage their debt judiciously can only have positive outcomes, including an improved credit score that will facilitate access to credit products that will further enhance their lifestyles, such as vehicle loans and home loans.”

Portfolio performance for unsecured products demonstrates resilience

Overall, delinquencies for unsecured products, including credit cards, personal loans and retail accounts showed a positive and resilient consumer performance story in the recent quarter, with serious account-level delinquencies declining. At the same time, secured products saw increases in missed payments, potentially as a result of higher interest rates and affordability challenges for homes and vehicles. While South Africans generally showed an increased commitment to making payments regularly, there are pockets of vulnerability that lenders need to assess and address.

For consumers carrying certain debt products that are vulnerable to interest rate increases, rate escalations between November 2022 and May 2023^[2] exerted financial strain, pushing them toward delinquency. This is evidenced by a notable uptick in serious account-level and balance-level delinquencies (90 days past due) on home loans, up 150 and 200 basis points YoY, respectively, in Q3 2023.

Despite worsening delinquency performance, the home loan market displayed growth, with loan originations increasing by 3.0% YoY. This implies that consumers committed to purchasing homes in the current environment may be largely unaffected by the increased cost of credit, suggesting a more affluent demographic.

“The South African consumer credit landscape in Q3 2023 is a study in contrasts,” said Naik. “While some sectors, such as clothing accounts and personal loans, are expanding their accounts in book, others like vehicle finance face challenges due to affordability challenges and the impact of higher interest rates. Across all sectors, risk management remains crucial, as does the need for targeted strategies to sustain confident growth while managing portfolio health.”

Table 1: Summary of Q3 2023 Metrics for Major Consumer Credit Products  

¹ Originations for Q3 2023 compared to Q3 2022 

² Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears

³ Includes both bank-issued, and non-bank issued personal loans 

^{[1] South Africa Retail Sales YoY (tradingeconomics.com)}

^{[2] South Africa Interest Rate (tradingeconomics.com)}