The national lockdown may have encouraged a culture of app-based savings
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According to the 2021 Consumer Pulse SA report, 83% of households reported that they view savings as more important now than before the Covid-19 pandemic, as a result, lockdown has had a positive effect on people's commitment to put away spare money.
Figures from Liberty Group's savings app, Stash by Liberty, show a significant increase in people putting money away from the start of the Covid-19 restrictions by making use of online money management apps like this.
Downloads on the app increased by more than 130% since the onset of the Covid-19 lockdowns in April last year. Along with this, the amount of money stashed per month has increased by over 300% when compared to the same time last year, meaning individuals are also saving more per month than they did pre-lockdown.
Over 100 000 people are currently using the app, and figures for usage growth in 2021 are on track for another 100 percent increase year on year.
"There are a number of explanations for this big increase, not least of which is the fact that it makes the discipline of saving easier," says Glenn Grimley, Chief Specialist for Digital Proposition Management at Liberty.
"One big reason is that the shock of lockdown made many people sit up and realise they did not have enough emergency savings for a situation like this. It's no secret that many people had to dig into any reserves they had, or even get into debt, to get by during this time.
"Another way of looking at this increase in savings and app use is that many people spent more time doing online research during lockdown and realised there were apps like Stash that could help them save. This was something they were reluctant to do in the past because they just kept putting it off for another time," says Grimley.
The real benefit of using apps like Stash is that they make saving money easy by providing a simple mechanism and cost-effective access to tax free savings and investment accounts.
"The popularity of Stash - which is free, is growing almost exponentially because you can put small amounts of money - literally your spare change - away everyday into Stash's tax-free investment account, and your money is invested into South Africa's Top 40 shares portfolio, or a cash+ portfolio, or into both, depending on your needs or investment goals. This is done automatically by the app, taking a lot of the mental hassle out of saving and investing.
Online apps like this connect directly to your bank accounts and have user settings that work in line with your unique lifestyle and spending habits. This is changing the behaviour of consumers' savings patterns as this technology puts them in full control of their own financial journey," Grimley says.
The Stash app has this year won two global awards for offering outstanding customer experience in the insurance industry. The 2021 Digital CX Awards saw the Stash app win the Outstanding Customer Experience Transformation in Insurance Award, as well as the Best Insurtech for Digital Customer Experience Award.
"Setting up a Stash account requires no paperwork and no fixed monthly financial commitment, and within no time a client has a tax-free investment account that has a wide range of features, including an attractive user experience to keep them engaged on their savings journey and to develop good savings habits. A little can go a long way towards encouraging a savings culture in South Africa" Grimley says.