5 minute read
Leadership - Chipo Mushwana
The Financial Resilience Imperative Imperative - An Essential Strategy
By Chipo Mushwana, Executive Of Emerging Innovation and Payments At Nedbank
In today’s rapidly evolving landscape, businesses and individuals alike are confronted with persistent challenges and continuous change. The global environment is characterised by economic volatility, geopolitical instability, technological disruptions, and complex social dynamics.
This intricate environment demands strong financial readiness to manage unexpected events and the capacity for quick adaptation. Consequently, the criticality of financial resilience is paramount for ensuring stability and success in the face of such unpredictability.
Financial resilience has thus transcended beyond being a mere safeguard; it has become an essential strategy for ensuring long-term financial health, prosperity, and growth. For individuals, this resilience equates to the ability to absorb economic impacts, such as escalating living costs, unforeseen bills, or a sudden loss of income. For enterprises, it involves the capacity to adjust to evolving market dynamics, effectively navigate risks, and bounce back quickly from setbacks.
The cultivation of financial resilience yields numerous benefits. For individuals, it affords a sense of security, enhanced financial autonomy, and the capacity to remain steadfast in achieving long-term ambitions despite any temporary obstacles. For organisations, resilience engenders operational stability, bolsters competitive edge, and empowers them to seize opportunities, even amid economic adversity.
Moreover, a financially robust society is better positioned to withstand economic turbulence, mitigating the severity of financial downturns and fostering sustainable economic expansion. In the context of South Africa, the establishment of a resilient society is a critical foundation that can stimulate innovation and cultivate a more predictable climate for economic progress and attractiveness to global investors.
Central to fostering financial resilience is the essential social contract between financial institutions and their clientele. Banks are instrumental in equipping individuals and enterprises to navigate economic fluctuations. This is the expectation that consumers and corporate clients have of their financial institutions—to serve as guardians of their fiscal wellbeing and reliable allies in their pursuit of financial stability and resilience.
This trust-based expectation affords banks both an obligation and an opportunity to develop products and services that reduce the burden of financial decision-making for their customers. The most obvious manifestation of this social contract is in the form of personalised solutions that help customers transact, save, reduce debt, and manage their finances more effectively. However, it’s a responsibility that extends beyond products.
It requires a commitment to financial education, transparent communication, and the development of tools that empower customers to make informed financial decisions. By creating this collaborative relationship, banks can, and should, play a transformative role in building a more resilient financial ecosystem that benefits everyone. transformative role in building a more resilient financial ecosystem that benefits everyone.
Innovation’s Crucial Role In Financial Reselience
The pivotal function of innovation and technology in cultivating financial resilience is indisputable. Fintech solutions have established themselves as robust platforms, offering more accessible and secure financial services that enhance stability and adaptability for individuals and enterprises alike.
Nedbank, a vanguard of resilience-centric digital innovation, has consistently acknowledged the significance of transcending mere technological novelty. Our pioneering payment solutions, such as the Nedbank Tap on Phone POS –the inaugural soft POS system in Africa – are instrumental in equipping SMEs with the tools necessary for sustainable growth and resilience. Similarly, Nedbank’s introduction of WhatsApp payments, another African first, bolstered resilience by streamlining the payment process for users.
Our recent innovation, the AVO Super App, continues this trajectory by enabling merchants to tap into new markets of unprecedented scale and reach, further demonstrating how technology can fortify resilience and open up new possibilities for growth.
Financial Resilience Is A ‘Team Sport’
While banks and other financial institutions have a key part to play in helping individuals and businesses become financially resilient, they can’t do it on their own. Resilience is a shared responsibility that requires commitment and dedication from all parties. There are several essential steps that any person or business should be taking to begin their resilience journey:
At the very least, for individuals, these include the following:
Build up an emergency fund
No matter what your current income or financial status is, aim to save at least three to six months’ worth of living expenses to help you overcome unexpected expenses in the future to six months’ worth of living expenses to help you overcome unexpected expenses in the future.
Diversify your investments
Spread your investments across different asset classes and geographies to mitigate risk and smooth volatility.
Improve your financial literacy
Never stop learning about financial matters.
Use financial tools and services
Leverage the digital platforms and fintech solutions available to you to help you manage your finances better
For businesses, financial resilience rests on the following pillars:
Robust risk management strategies
Identify potential risks and develop actionable mitigation plans.
Investment in technology
Don’t wait for a crisis to look into digital. Adopt technologies now that can streamline operations and enhance security and operational sustainability
Diversified revenue streams
Explore new markets and diversify products and services where possible. If you can, up-skill your staff to enable them to help you pivot your business if required
Strategic partnerships
Collaborate with your bank and other businesses to leverage expertise and resources.
The journey to financial resilience presents challenges, yet through dedicated effort, strategic partnerships, and the adoption of effective tools and perspectives, it is a critical and attainable objective for all South African individuals and enterprises to prosper in a dynamic global landscape.
