From advances in technology to global political influences, there are myriad factors influencing South Africa’s financial landscape. Here’s a look at some of the emerging trends to look out for in 2025 and beyond.
We’re a quarter of the way through the Twenty-First Century and the century that began with fears around the Y2K bug has certainly been eventful. Climate change is no longer a topic reserved for scientific journals and environmental activists – it’s entered mainstream conversation as a very real phenomenon, requiring urgent attention. Wars have impacted the global economy. The world has endured the 2008 financial crisis and the Covid-19 pandemic. And technology has revolutionised how we live and work – consider that before the year 2000, there was no social media, no cloud computing, Google was new, and cell phones had yet to become “smart”. A tablet was something you swallowed when you had a headache. The concept of anything resembling ChatGPT was firmly in the realm of science fiction.
Looking ahead, the rapid pace of evolution shows no sign of slowing down, creating both challenges and exciting opportunities for the financial services industry.
Hope for South Africa
“We are hopeful about South Africa,” says Ronald King, Head: Public Policy & Regulatory Affairs at PSG. “If positive experiences from the government are felt by the normal South African – and especially businesspeople – they will start considering investing in the country. And then, firstly, markets will start winning, and secondly, economic growth will start picking up – not necessarily in 2025 but going forward. So, if the political will remains in the country, then that is good.”
Earlier this year the Executive Board of the International Monetary Fund (IMF) released their report following their scheduled Article IV consultation with South Africa. It stated that real GDP growth was projected to accelerate to 1.5 percent in 2025, “driven by recovering private consumption and investment supported by stable electricity generation.”
While the report acknowledged that South Africa still has a long way to go, the directors found several reasons for optimism. The report was especially optimistic around the GNU, noting that the directors “welcomed South Africa’s new Government of National Unity and its commitment to reforms aimed at addressing long-standing challenges.”
RSA vs USA
This year has seen headlines dominated by Trump Administration 2.0 and its questionable foreign policy. The relationship between the White House and South Africa has got off to a rocky start.
“The one danger at this stage is the increase in tension between South Africa and the US,” notes King. Personally, I am not too worried about it because the US can also not afford to completely lose Africa to the East. So even though they will become very aggressive from the stage, I don’t think behind the scenes it will necessarily result in a negative impact.”
In February, HIV/Aids organisations received the devastating news that the United States Agency for International Development (USAID) was terminating their funding through PEPFAR, the US President’s Emergency Plan for AIDS Relief. Speaking to Daily Maverick, health and human rights activist Mark Heywood said, “The axe has effectively fallen, and we have moved from ‘cease work’ suspension notices to actual termination.”
While this was a massive blow to humanitarian work, King says in the greater economic scheme of things, the real test is yet to come. “The main one that we will constantly have to keep an eye on is the AGOA agreement.”
The African Growth and Opportunity Act (AGOA) is due to expire in September. Established in 2000 and renewed for ten years in 2015, it gives eligible African countries – those that have met certain criteria laid out in the agreement, such as making progress towards a market-based economy and political pluralism – tariff-free access to the US market for certain products. Currently, 32 African countries export over 1 800 products to the US, duty free.
“If AGOA is cancelled, then it could really hurt us. So, we will have to keep an eye on that,” says King.
Looking at the international environment, King expects it to be difficult. “There’s going to be much more inflationary pressure due to Trump’s attitude towards international trade and that might limit the leeway that our Reserve Bank has to reduce our interest rates, so that that could have a bit of a negative impact,” he says.
Notably, the IMF report stated that, “Directors commended the South African Reserve Bank’s effective monetary management, which supported a decline in inflation. Looking forward, they recommended maintaining a flexible and data‑driven approach to monetary policy decisions amid ongoing uncertainties. Directors saw merit in shifting, at an opportune time, from the current inflation target band to a lower point target, which will require careful design, gradual implementation, close coordination, and appropriate communication.”
When it comes to matters of valuation, “even though the US and the offshore world may still be poised for greater growth than in South Africa, we believe that our markets are more negatively priced and therefore there is a higher opportunity,” says King. “And if the positive feedback loop from the GNU really starts getting momentum, the growth in the market will be in the South African market – although the economic growth might still be lagging.”
Feeding positivity
When the news cycle is negative – as is often the case – clients can become nervous and run the risk of making rash decisions around their finances. This is where advisers need to be the voice of reason, says King. “Advisers should not be feeding any negative feedback loops,” he says.
He adds, “Advisers need to realise that they cannot predict the future of a market; they cannot predict the future of the funds. The most important thing that they need to do is build a plan for the client and get their clients’ emotions out of the equation. And that they do by ensuring that their clients have got the right information.”
New technology
In the insurance arena, AI is revolutionising underwriting by automating decision-making and enhancing accuracy. Riaan van Reenen, CEO of Discovery Life, says the company utilises AI to digitise historical underwriting data, providing insights that improve both efficiency and outcomes, as well as greater personalisation. “AI can identify high- and low-risk cases for automatic processing, freeing up underwriters to focus on more complex cases,” says Van Reenen.
He adds that the more AI is used to enhance personalisation into that model, the more it will benefit the clients and the risk pool.
Another innovation in insurance is leveraging cell phone technology to streamline the assessment process. It’s already common practice to submit photographs of damage for car insurance assessments – now a similar principle is being explored for life insurance assessments.
Lisa Balboa, Head of the Life and Health Digital Business Accelerator, Hannover Re says the company is piloting video selfies to assess health indicators like blood pressure, cholesterol, and blood glucose levels. She notes that this tech isn’t 100% accurate yet, so Hannover Re has adopted a multivariate approach that includes broader general health measures taken by nurses and comparing those with the selfie readings. “Through a 30-second video selfie taken using a bespoke app on a person’s mobile phone, we aim to segment customers by risk level into those who need further medical testing during underwriting and those who don’t,” she says. “What’s more, the accuracy of the algorithms giving these health insights is improving, so this tech shows plenty of promise.”
Leveraging data
The financial services industry has access to vast amounts of data and using it in clever ways can help enrich the client experience. The integration of third-party health data is unlocking new possibilities. According to Balboa, in some global markets, country health systems’ data is already available digitally via APIs (software interfaces that allow different applications to communicate with each other). “In the US, for example, Hannover Re has partnered with one of the big lab groups to obtain pathology data, like blood test results, from consenting customers. We can then feed that data into the underwriting rules engine when the customer applies for insurance to enable auto-decisions, when appropriate.”
She adds that digital health data such as electronic health records and pathology lab data can enhance product availability for impaired lives. For example, in Australia, a recent pilot study using electronic health records (EHRs) tested whether EHRs could enable cover in previously declined applications.
“If someone would have traditionally been declined before for cardiovascular underwriting (in the direct to consumer, no medical evidence model environment), the insurer could instead ask the customer for consent to review their electronic health records. The goal is to, where possible, provide them with insurance coverage either on their original product terms or on a modified version of the same product with a more limited sum assured,” explains Balboa.
New metrics for insurance
VO2 max, a measure of cardiorespiratory fitness, is gaining traction as a potential underwriting tool. VO2 max measures the maximum amount of oxygen that your body can use when you’re exercising. Recent research by Discovery Vitality shows that even a moderate improvement in VO2 max can reduce risk of death by 21-30%. “The correlation between health and VO2 max is strong according to scientific evidence,” explains Van Reenen. “Generally, a higher VO2 max equates to better aerobic endurance, and knowing and improving VO2 max helps improve overall health. In the long term, cardio fitness not only influences how long one will live but also how many of those years will be in good health. Because VO2 max estimates can be collected from wearable devices, this has become a valuable metric.”
Heart rate variability (HRV) is also emerging as a key indicator of physical well-being. According to Balboa, HRV reflects the body’s ability to respond to stress, and a higher HRV reading signals better stress management.
She notes that studies also show a link between HRV and mental health. “We’re at the early stages of exploring the use of this measure in an insurance context. The measure could potentially be used as a screening tool for the underwriting of mental health stress. For clients where HRV indicates mental stress, the insurer could proactively guide that individual, offering support to manage their mental well-being before a claim event occurs on a life, health or disability insurance policy.”
Resting heart rate (RHR) is another valuable measure for insurers. “If you look at the literature, there’s a documented link between RHR and mortality (lower RHR is associated with lower mortality risk). Based on this, insurers can develop pricing strategies where clients with good heart health benefit directly, like getting possible premium discounts for life insurance.”
With more and more people opting to use wearable devices that measure their heart rate and can track both RHR and HRV, these metrics are becoming more accessible and helping people pick up heart issues before they turn into medical emergencies.
As the world continues to move towards an increasingly online and digital future where misinformation abounds, humanity is becoming more important in financial services than ever. Clients need to know they have a trusted, knowledgeable human whom they can turn to for reliable advice and who can make sense of a world in which information overload is becoming the norm.
“I think advisers should ensure that they are more informed and make sure that they do not fall for misinformation and disinformation,” says King. “A lot of people say that in the AI world, it is going to be the relationships that advisers have that count. I don’t agree with that. I argue that if I have enough information about you, I can fake emotions, and computers can do that. But the role that we are going to have to play is to be the filter of what is truth and what is not and that, to me, is going to be a very important role.”
