Achieving financial freedom in Zambia has become increasingly hard post pandemic, due to several factors causing economic strain.
Bank usage in Zambia has dropped in the past from 24% to 24% from 2015 to 2020, while digital financial service use took off from 14% to 59% of the total population. Banks have started shifting away from expensive branches and to mobile money operators, however, given the different client bases, and various needs this move has been inadequate. While mobile money usage is greater, banks are losing clients processes to onboarding are more tedious and require more diversification (3-4 banks) for a client to meet their business needs. Banks in Zambia really need to take actions to serve the people, through engaging with their needs and pursuing long-term relationships. One way in which banks can do this, is through offering products and services that can help individuals achieve financial freedom.
Achieving financial freedom in Zambia has become increasingly hard post pandemic, due to several factors causing economic strain. The Zambian currency has lost almost half of its value against the US dollar, and inflation rates have caused an accumulation of debt for many. Studies have shown that these factors have cause a substantial number of Zambians to be pushed further into precarious circumstances. Therefore, making this a critical time for banks to foster to the needs of the people, and work to introduce products and services to bring more hope to those looking to achieve financial freedom. It is vital for banks to understand their audience and gauge how priorities and motivations shift over time, through evaluating various demographic factors (e.g., age-groups) and other factors at play.
Consumers in Zambia are looking to achieve financial freedom, but time is not on their side
According to Kasi data, most consumers in Zambia are thriving to achieve financial freedom. Our recent poll conducted in March 2020 amongst 505 respondents, reveals that 63% of the respondents stated yes when asked if they were looking to achieve financial freedom; therefore, demonstrating a high motivation towards this goal.
Baby Boomers and Gen X show the greatest motivation towards achieving financial freedom in Zambia. From the respondents that stated yes, Baby Boomers (83%) and Gen X (69%) showed the greatest motivation towards financial freedom amongst the age-groups. The data shows that the older they are the more likely they want to achieve financial freedom. This is an important finding for banks as it shows that consumers are not tooled earlier in their lives to position themselves well for success later. What are the banks doing about it?
Financial freedom is less of an appeal for the younger crowd, in fact 59% of Millennials and 47% of Gen Z respondents stated yes to looking to achieve financial freedom, the percentage is high but below the average of 63%. Again, what are the implications for banks as they look to target the young and digital savvy consumer segments?
Baby boomers take a practical approach to financial freedom while Gen Z dream of fancy lifestyles
One thing is to aspire to reach financial freedom, another is to know what financial freedom means to you. The data reveals that financial freedom does not mean the same thing for consumers in Zambian. For most respondents, (4 in 10), financial freedom means being flexible to make lifestyle choices (e.g., vacations, working less), while 37% of respondents say that financial freedom means being on track to meet financial goals (e.g., buying a house, starting a business).
Furthermore, across age groups there are more noticeable differences in the meaning of financial freedom. For 44% of Baby Boomer respondents, financial freedom means feeling in control of day-day expenses, while for 51% of Gen X financial freedom means being flexible to make lifestyle choices.
Millennials respondents were on the fence with some stating that financial freedom means being on track to meet financial needs, while others look for the flexibility in making lifestyle choices. Gen Z had the greatest variation in responses; whist most respondents look to achieve flexibility, there was an equal agreement for the other options on the meaning of financial freedom.
It is important for banks to understand what financial freedom means to each age-group in order to accommodate for differing needs when it comes to achieving this goal. A blanket approach across all age-groups is unlikely to work, as demonstrated by the data.
Being a true life partner is the big opportunity for banks
As Zambians progress through life or their careers, their financial priorities shift. As seen in the findings, by age group the meaning of financial freedom varies.
Banks have a huge opportunity to help the population meet these goals, through evaluating what the needs of the consumer are. Especially in the current economic climate, it is imperative for banks to work with consumers to find ways of implementing products and services that will bring prosperity and hope for consumers. Even for those not looking to achieve financial freedom, having more accessible and tailored options, could be encouraging and provide incentive to start on this journey.
These differences are vital to note, especially for banks who are looking to introduce products/services that enable individuals to work towards financial freedom. Such differences in the meaning of financial freedom can resort in individuals looking for different investments, savings plans, etc. It is time for banks to be innovative and really come up with relevant offering for consumers.
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