South Africa’s financial sector is prioritising governance and guardrails as it moves to adopt AI as quickly as possible.
This is according to senior financial services executives who were participating in an executive roundtable hosted by IBM in partnership with ITWeb in Sandton this week.
The roundtable addressed the impact of AI on the financial sector, and how organisations were moving to harness it.
Participants from leading South African financial institutions said AI was evolving rapidly, forcing them to adapt quickly to enable productivity and innovation, while also ensuring the proper governance and ethics frameworks were in place. They noted that none of them wanted to get left behind, so their governance frameworks were being designed to facilitate experimentation.
AI a key trend in finance
AI is among the top trends impacting the financial sector today, said Lerato Lamola, Partner: Financial Regulatory at Webber Wentzel.
Outlining trends impacting the fintech year ahead, she highlighted a survey carried out by the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) titled: "Artificial Intelligence in the South African Financial Sector". It found that the AI risk appetite in the financial sector is dependent on use cases.
Lamola said AI was being deployed to enable hyper-personalisation, for credit risk assessments, enhanced fraud detection and improved cyber security. However, organisations needed to get their AI governance frameworks in order and consider issues like explainability. “Financial institutions must explain to consumers how they came to a decision. But many AI tools lack explainability. So you have to assess your business’s trust factors,” she said.
Other key developments impacting the sector were the Payments Ecosystem Modernisation (PEM) programme and emergence of Digital Financial Identity; crypto and blockchain, expected work by regulators on open finance standards and frameworks, and expected regulatory clarity on Embedded Finance/Buy Now Pay Later (BNPL).
Banking on the AI unknown
Pablo Padin, Senior Partner, IBM Consulting, Core Banking & Payments (EMEA), said AI was expected to drive up to $4.4 trillion in productivity gains by 2030, and that executives are shifting funding accordingly.
He highlighted an IBM Institute for Business Value report which found that 79% of global executives and 80% of South African executives surveyed say AI will significantly contribute to their revenue by 2030, but only 24% can clearly see where that revenue will come from.
“By 2030, technology will have removed many of the most persistent challenges enterprises face today, but right now, executives are banking on the unknown,” he said.
IBM research shows that South African and global executives expect surges of approximately 147% and 149% in AI investment between 2025 and 2030, respectively. While 47% of AI spend is focused on efficiency today, South African executives expect 63% to be dedicated to product and service and business model innovation by 2030.
Seventy percent of South African executives expect AI to eliminate resource and skills constraints that currently hold their organisations back, but 47% of them say their competitive advantage will come from innovation rather than resource optimisation. Seventy percent are looking to use the value gained from AI to fund investment and growth across the organisation.
Padin noted that winning in 2030 would depend on a combination of creativity, confidence and speed, with 60% of South African executives saying competitive advantage in 2030 would depend more on speed of execution than perfect decision-making.
He said competitive pressure would make big bets non-negotiable.
Padin called on enterprises to focus on becoming AI value creators, not just occasional AI users. One model would not rule them all, he said, so organisations needed to bet on community, small language models and multi-model strategies. They also had to foster AI fluency, focus on AI use cases and put governance at the heart of the AI life cycle, building AI models responsibly and transparently.
Ria Pinto, Country General Manager and VP Technology at IBM South Africa, said: “IBM’s focus for the past few years has been on helping to make AI real for customers. Helping them scale across the business by combining trusted AI and real-time data. Our acquisitions of Red Hat, Confluent and DataStax allow us to provide the foundations for AI at scale, especially in highly regulated industries like banking and finance.”
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