Fresh off its R11.7 billion Managed Evolution IT overhaul completed last year, big-four bank Nedbank is setting its sights on the “next frontier” of technology investments.
It says this is a strategic push to sharpen its competitive-edge in South Africa’s increasingly fierce banking market.
This is according to Mfundo Nkuhlu, Nedbank chief operating officer, speaking to ITWeb after the JSE-listed financial services group announced its interim results for 2025.
He said the bank expects to invest between R1.8 billion and R2.5 billion per year to keep pace with emerging technologies.
According to Nkuhlu, the bank is also considering launching its own mobile virtual network operator platform, following in the footsteps of its rivals.
This, as South Africa’s major banks are stepping up technology spending as competition from agile, digital-first and branchless players heats up.
These newcomers, unburdened by legacy infrastructure, are leveraging cloud computing, artificial intelligence (AI) and mobile-first platforms to deliver faster, cheaper and more personalised banking services.
In response, traditional institutions are modernising core systems, enhancing digital channels and using advanced analytics to improve customer experience, streamline operations and protect market share.
According to Nkuhlu, while Managed Evolution is complete, the bank is not resting on its laurels. “Technology does not stand still.”
In the short-term, he noted, Nedbank expects a drop in IT spend, reflected in the amortisation of its IT asset.
“Our activities in technology have not stopped,” he said. “At the end of last year, we completed Managed Evolution, having spent R11.7 billion over a 10-year period to modernise our IT stack and make it more modular and more agile. We can see the benefits of that now as it is reflected in a drop in amortisation of the asset in the balance sheet.”
Moving target
He added that attractive new technology solutions continue to emerge. “You don’t just invest in technology and stop. Now we are looking at more targeted areas of opportunity, and in this regard, I think the next frontier will be to refresh our card solution, as well as to continue with payments modernisation.”
Managed Evolution focused on client onboarding, payment channels and core banking integration, but some product suites, such as the card solution, were not covered, he said.
“We initially indicated to the market that we will be projecting future cash flow spending levels at around R1.8 billion per annum. We think that in light of the new solutions we are working on and some of the investments we are making on card payments, that order of spend is probably going to be around R2.5 billion.
“Over time, we would expect a pick-up in the IT investment programme but that pick-up should be more than compensated for by the benefits that we will realise in time.”
On payments modernisation, Nkuhlu said it has two aspects – industry-wide initiatives led by the central bank, and Nedbank’s own internal projects.
He also revealed the bank is exploring over 50 generative AI (GenAI) use cases. “GenAI has broad applications. First of all, in relation to driving sales and client service to the extent that we are able to get deeper insights into our clients and use data to drive predictive analytics.
“It’s not only restricted to sales but we are seeing the use of AI and GenAI in our marketing activities and risk environment, particularly in modelling our management of risk, and as a consequence of that, in the use and allocation of capital. We also see AI and GenAI driving our productivity gains, which should lower the cost to save.”
He said these technologies will help staff deliver services more cost-effectively, both in support functions and in direct client engagement.
Digital gains
Highlighting Managed Evolution’s benefits, Nkuhlu pointed to strong growth in Nedbank’s digital channels during the first half of the year.
Digital volumes grew at double digits, with digital sales reaching 70%. Retail digital transaction volumes and values in South Africa rose by 15% and 16%, respectively, while digitally-active retail clients increased by 8% to 3.2 million – over 70% of main-banked retail clients.
In the Nedbank Africa regions business, digitally-active clients rose from 67% to 69% of the total active base.
The Nedbank Money App grew its active user base by 10% to 2.8 million, with transaction volumes up 16% and values up 14%.
In Africa, Money App usage increased by 17%. Adoption of the Nedbank Business Hub (NBH) grew to 65% from 56% year-on-year, and with a new mobile app and the migration of its domestic transaction platform to NBH in 2025, this growth is expected to continue.
“What this shows is that the investment we made in Managed Evolution was timely and is certainly positioning us to continue to drive growth in our digital channels.
“On the payments front, we implemented PayShap for small, fast payments solutions in the market and we had a pricing strategy that took pricing per transaction all the way to R1 per transaction.
“That resulted in volume growth of over 250%. That will certainly help with money transfers at the bottom end of the market to be available over digital channels and at affordable prices.
“That can be contrasted to what we saw as a low 2% growth in ATM cash withdrawal volumes. So, digital channels are increasingly compensating for cash transactions. That, for us, is the overall direction of travel in the future, particularly given that digital channels are delivered at a fraction of the cost of cash services.”
Meanwhile, Nedbank Group reported a 6% rise in headline earnings to R8.4 billion for the six months to 30 June, as stronger fee income, associate contributions and improved credit impairments offset muted lending income.
Return on equity edged up to 15.2% from 15% a year earlier, underscoring the bank’s resilience in a tough economic climate, it says.
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