Nedbank has helped 1.8 million clients rehabilitate; 82 000 keep their cars; 9 000 keep their homes; and over 25 000 sell their cars and homes in the open market since the first interest hike in 2021 – simply because they opened up to the bank for help.
After a barrage of sustained interest rate hikes since November 2021, which have left many South Africans in a debt and cost-of-living crisis, Nedbank has provided much-needed relief to just under 2 million clients by helping them to rehabilitate while aiding 9000 South Africans to retain their homes, over 80 000 from losing their cars and assisted over 25 000 to sell their vehicles and homes in the open market – simply because they approached the bank for help.
“Many South African consumers do not have to endure the distress of losing their homes, cars and financial health amid a difficult economy,” says Nozizwe Tshabuse, Managing Executive for Client Debt Management and Recoveries. “What many consumers need, now more than ever, is a shift in how they perceive their relationship with the bank to be. The consumer mindset needs to switch from one of fear that the bank is on standby to repossess assets to one of trust that the bank is open, empathetic, and already has solutions in place to help clients navigate difficult financial seasons without their financial dignity being compromised.”
‘Life-changing’ outcome for Nedbank clients who have reached out to the bank
For clients who have reached out to Nedbank for help since the first interest hike after the Covid-19 pandemic, the outcome has been life-changing. Tshabuse says Nedbank has achieved this by:
· offering clients customised repayment plans to recover outstanding payments over a set period of months;
· restructuring contracts to allow for more affordable instalments over a longer period; and
· helping clients downscale or sell their cars and homes on the open market and not under distressed-sale prices.
‘The benefit of proactively engaging your bank when you’re overwhelmed financially will lead to better outcomes, like minimising negative consequences, protecting your credit and financial health as well as providing the opportunity to explore potential solutions to better manage your debt burden,’ adds Tshabuse. ‘Clients who have approached Nedbank have been able to avoid unnecessary legal action, preserve their credit score, access financial resources for efficient money management, protect themselves from losing assets and make calculated financial decisions that will help them reduce or get rid of their debt.’
Common mistakes that compromise distressed clients
‘Because consumers perceive banks as being driven solely by profit and just ‘after our money’, it is a common psychological trait for clients to shy away from approaching their bank – especially when they are facing financial difficulties or have missed a payment – because of a natural tendency to avoid a potentially distressing situation,’ notes Tshabuse.
According to Tshabuse, the bank has observed several key insights that have become prevalent since interest rates started to spike in November 2021. These insights shine the light on how clients approach their debt reality, and how this impacts their financial health going forward.
Key insights include the following:
- The committed payer: These clients frequently resist seeing themselves as defaulters or non-payers, so they adopt the identity of determined payers despite their unforeseen inability to meet repayment obligations. This is exacerbated by the next point.
- The ostrich effect: Much like ostriches that bury their heads in the sand, these clients often ignore any information or communication such as SMSs, calls and even bank statements, unintentionally turning a blind eye to their repayment obligations or anything related to them. This leads to a disconnect with changes to monthly instalments due to interest rate hikes, which results in accumulative arrears. Unfortunately, this approach also limits their knowledge of and information about the range of relief options available for them.
- Procrastination, overconfidence and optimism: These clients tend to delay addressing their financial troubles because they hold on to the hope that upcoming or expected windfalls, like bonuses, will rescue them and they disregard the effect delaying their payments may have on their credit history and record.
The recently released NedFinHealth Monitor, which has quantified South Africa’s financial health score to 53 out of 100, has also found that South African consumers are continuing to turn to debt to contain the knock on their disposable income. When debt spirals out of control, financial shame, which is intrinsically linked to financial hardship, prevails and deters individuals from seeking financial help. Tshabuse urges clients to overcome these barriers by reaching out to the bank as soon as possible or by not being too ashamed.
‘While we wait for the much-deserved relief that will see consumers regain control over their finances and enjoy pockets that are less drained, Nedbank is ready, with empathy and compassion, to listen and assist clients with practical solutions that will help them regain control of their financial affairs,’ elaborates Tshabuse. “Ultimately, the bank is not just a bank; it is a partner in its clients’ financial journey. As Nedbank, we have the expertise and the resources to help clients achieve their financial goals and dreams. All they need to do is trust by reaching out when they need help”.
