Why your business needs digital transformation

(1)

Why your Business Needs Digital Transformation

Wendy Dent – Director: Research and Industry Insights,

TransUnion Africa

(2)

Agenda

The Consumer – why should you care

The need for digital transformation

4 th Industrial Revolution

Where to from here?

(3)

GDP growth although picked up in Q2 is still under pressure – manufacturing growth remains low

2.5%

1.5%

-15%

-10%

-5%

0%

5%

10%

15%

%Q-O-Q, real, annualised Manufacturing Q-O-Q Growth

* Constant 2010 prices, seasonally adjusted. Q-O-Q annualized

Source: StatsSA

Growth in GDP Q-O-Q

Consumer spending percentage of

GDP

60%

(4)

Increased unemployment rates across income groups should be a concern for lenders

27.7%

13.6%

60.5%

50%

53%

55%

58%

60%

63%

65%

0%

5%

10%

15%

20%

25%

30%

Par ticip atio n Rate

Unem plo y me nt Rate

Unemployment Rate Graduate Unemployment Rate Participation Rate

Unemployment Rate

Source: Stats SA

(5)

Low CPI is a welcome relief for consumers who have felt pressure on basic items

4.80%

3%

4%

5%

6%

7%

8%

80 85 90 95 100 105

Headline CPI Inflation (annual %)

CPI

(Y-O-Y)

In flatio n

(YOY)

Inflation and CPI

Source: Stats SA

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Consumer spending and confidence remain subdued as consumers struggle with inflationary pressure

2017-Q2, -9 2017-Q2, 4.70%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

-25 -20 -15 -10 -5 0 5 10 15 20 25

2 0 0 7 -Q1 2 0 0 7 -Q2 2 0 0 7 -Q3 2 0 0 7 -Q4 2 0 0 8 -Q1 2 0 0 8 -Q2 2 0 0 8 -Q3 2 0 0 8 -Q4 2 0 0 9 -Q1 2 0 0 9 -Q2 2 0 0 9 -Q3 2 0 0 9 -Q4 2 0 1 0 -Q1 2 0 1 0 -Q2 2 0 1 0 -Q3 2 0 1 0 -Q4 2 0 1 1 -Q1 2 0 1 1 -Q2 2 0 1 1 -Q3 2 0 1 1 -Q4 2 0 1 2 -Q1 2 0 1 2 -Q2 2 0 1 2 -Q3 2 0 1 2 -Q4 2 0 1 3 -Q1 2 0 1 3 -Q2 2 0 1 3 -Q3 2 0 1 3 -Q4 2 0 1 4 -Q1 2 0 1 4 -Q2 2 0 1 4 -Q3 2 0 1 4 -Q4 2 0 1 5 -Q1 2 0 1 5 -Q2 2 0 1 5 -Q3 2 0 1 5 -Q4 2 0 1 6 -Q1 2 0 1 6 -Q2 2 0 1 6 -Q3 2 0 1 6 -Q4 2 0 1 7 -Q1 2 0 1 7 -Q2

Consumer Confidence Index Real final consumption expenditure by households

Consumer Confidence Index 1 & Consumer Spending 2

1 FNB/BER Consumer Confidence Index

2 Real final consumption expenditure by households - Quarter-on-quarter percentage change at seasonally adjusted annualised rates

Source: Bureau for Economic Research; SARB

Cons ume r C on fid e nce I nd e x Consumer Sp endi ng

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Decrease in consumer debt ratio is most likely due to the slow down in consumer spending

2017-Q1, 73.20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2 0 0 0 -Q1 2 0 0 0 -Q4 2 0 0 1 -Q3 2 0 0 2 -Q2 2 0 0 3 -Q1 2 0 0 3 -Q4 2 0 0 4 -Q3 2 0 0 5 -Q2 2 0 0 6 -Q1 2 0 0 6 -Q4 2 0 0 7 -Q3 2 0 0 8 -Q2 2 0 0 9 -Q1 2 0 0 9 -Q4 2 0 1 0 -Q3 2 0 1 1 -Q2 2 0 1 2 -Q1 2 0 1 2 -Q4 2 0 1 3 -Q3 2 0 1 4 -Q2 2 0 1 5 -Q1 2 0 1 5 -Q4 2 0 1 6 -Q3

Debt to Income Ratio

Household Debt to Income Ratio*

2017-Q1, 9.50%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2 0 0 0 -Q1 2 0 0 0 -Q4 2 0 0 1 -Q3 2 0 0 2 -Q2 2 0 0 3 -Q1 2 0 0 3 -Q4 2 0 0 4 -Q3 2 0 0 5 -Q2 2 0 0 6 -Q1 2 0 0 6 -Q4 2 0 0 7 -Q3 2 0 0 8 -Q2 2 0 0 9 -Q1 2 0 0 9 -Q4 2 0 1 0 -Q3 2 0 1 1 -Q2 2 0 1 2 -Q1 2 0 1 2 -Q4 2 0 1 3 -Q3 2 0 1 4 -Q2 2 0 1 5 -Q1 2 0 1 5 -Q4 2 0 1 6 -Q3

Prime Lending Rate

Ratio of Debt-Service Cost to Disposable Income

Household Debt-Service Cost Ratio*

*Seasonally Adjusted Source: SARB

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Secured loan delinquency rates have been increasing for the last 6 quarters reflecting consumer pressure

Secured account level delinquency (3+ MIA)

% of a cc ou nts

Source: TransUnion consumer credit database 3.4%

4.2%

2.3%

3.5%

15.5%

20.9%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1

Mortgages Auto Bankcard Personal Loans

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A change in strategy and thinking…

Tough Economic Environment

High

Commoditization and Competition

Increasing Input Costs

Evolving

Consumer Needs

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What if you could sustain profitable revenue growth?

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You need to stand out in the crowd

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4 th Industrial Revolution

Creating Ties throughout the Value Chain

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Stop thinking big data, start thinking smart data

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Benefits and Challenges

Reduced Costs

Improved productivity Inventory optimisation Improved product quality Improved customer

service

Capital outlay IT security

Job losses

Lack of expertise in

organisation

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Case Study

• Uses digital tools to improve distribution and build bonds with consumers.

• Renowned for developing and shipping new products within two weeks.

• Digital tools used to respond even faster to consumer preferences and reduce supply- chain costs

• Attaching reusable radio-frequency

identification (RFID) tags to every item of clothing in more than 700 of its 2,000-plus stores.

• Ten staff members can now update a store’s

inventory in a couple of hours—work that

used to take 40 employees more than five

hours—by waving small handheld computers

at racks of clothing.

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1.How will digital disrupt my industry in the next five to ten years, and what new ecosystems will emerge?

2.Where is the value for my company, and how can we maximize it?

3.How close is the revolution to our factory doors, and where should I make investments in infrastructure, cybersecurity, and partnerships?

4.What new capabilities, skills, and mind-sets will we need in our

organization? How will we identify, recruit, and retain the right new talent?

5.What should we pilot now to start capturing this value?

What should you be thinking about?

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#1 – Remember that’s it not just about the data…

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#2 – Start small and show value quickly

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#3 – Stop trying to do it by yourself

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What value will you deliver next?

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Thank you

[email protected]

Wendy Dent – Director: Research & Industry Insights,

TransUnion Africa