South African Banking: A Cause for Optimism in an Era of Perpetual Doom
Few forces stimulate progress as powerfully as momentum.
It is a crucial factor influencing outcomes in fields as diverse as sport, politics, conflict and economic development (just ask Rassie Erasmus or Donald Trump).
Without it, progress generally remains slow and easily derailed.
This makes the prolonged stability and growth achieved by South Africa’s banking industry all the more remarkable considering the historical lack of momentum in its primary market.
Against this backdrop, recent signs of renewed economic momentum emerging in Africa’s most developed nation have given South Africans cause to celebrate our banking exceptionalism, driven by an industry that is well positioned to fund and finance this rare upswing through 2026 and beyond.
While South Africa’s financial services are not without their challenges, the banking industry’s stability, innovation and deep-rooted customer trust provide strong grounds for optimism going forward.
Stability
South African banks have delivered consistently strong financial performance over the years but they had a standout year in 2025.
The industry saw combined headline earnings growth of 9.4%, outperforming developed regions including the Europe Union and United Kingdom.
Particularly noteworthy were the positive financial result announcements from Standard Bank and Absa, which reported earnings increases of 11% and 12% respectively.
These improvements largely reflect a local banking culture grounded in prudence and transparency – one that actively embraces calculated risk‑taking while also exceeding the Amended Financial Sector Code (FSC) targets for black ownership and economic interest.
The industry leads the way in risk and regulation having met and exceeded several international regulatory requirements including the management of critical risk data (BCBS 239) as well as capital and risk management (Basel IV).
As a result, South African banks are positioned ahead of European banks in data management and governance maturity and are more closely aligned with international risk modelling and management standards than regions like the United States, which is increasingly departing from established global frameworks.
South Africa’s removal last year from the FATF grey list, an international anti–money laundering watch list whose designation was once described as being as damaging as a credit status downgrade, provides an additional boost to the country’s financial system.
The delisting means South Africa will no longer be subject to enhanced due diligence, reducing friction in cross‑border transactions and enabling capital to return to a broad range of domestic investment opportunities.
Innovation
South African banks are leaders in technology adoption across the economy. In the Financial Sector Conduct Authority’s 2025 Artificial Intelligence (AI) survey, 52% of banks were actively adopting AI into their operations while insurers, investment and pensions funds sat at 8%, 11% and 14% respectively.
This is unsurprising, given that banks have integrated machine learning into their anti‑money‑laundering operations for years, alongside other applications such as customer cross‑selling and transaction monitoring.
From the survey, the financial industry highlighted data analytics and insights, productivity, and operational efficiency as the strongest benefits to be gained from both traditional AI and generative AI adoption.
This ultimately translates into more personalised, streamlined and competitive products and services for customers.
Enhanced cybersecurity and fraud prevention were also highlighted as particularly significant benefits given South Africa’s elevated cyber risk profile, with the country ranking 14th globally on the University of Oxford’s cybercrime index.
South African banks continue to invest heavily in their IT infrastructure as they modernise operations and overhaul their data architectures.
A notable standout is Capitec, which recorded a 32% year‑on‑year increase in IT spending last year as it migrated its data architecture to the cloud.
This is an essential strategy as banks seek greater efficiency and scalability. In a similar vein, FirstRand, Nedbank, Absa and Standard Bank increased their IT budgets by between 2% and 9% in 2025, building on an already substantial spending base and lifting total IT expenditure across these banks, together with Capitec, to R40.6 billion.
Trust
Compared to markets like the US, UK, Australia and much of Europe, South Africans have a positive perception of their banks.
This may seem trivial but without societal trust in financial services, people forgo a bank account and the variety of essential benefits associated with it.
This includes compound interest returns, instant payments, fraud protection, and other increasingly useful ancillary products and services such as e-wallet, digital utility bill payment and dynamic reward programs.
South Africa’s banking landscape is becoming increasingly dynamic, driven by the entry of new players such as Discovery Bank, GoTyme Bank and Bank Zero, alongside growth opportunities emerging from incumbents like Old Mutual, the UK’s Revolut and Pepkor.
Together, these developments are intensifying competition across the sector, expanding customer choice and driving improvements in products and services.
A recent sentiment analysis by DataEQ found the industry’s net sentiment score (a metric that quantifies customer experience by calculating the difference between positive and negative social media interactions) to be positively skewed at 27%.
This is double that of the United Kingdom (13%), where large traditional banks all have negative scores.
In celebration of the progress already achieved in South African banking, and in an effort to support its continued momentum by fostering debate on the future of this critical industry, the Gordon Institute of Business Science, in partnership with Monocle, is proud to host the 2026 Beyond Banking Conference.
Taking place on 9 June, the event will feature a line-up of distinguished speakers with deep knowledge of the local banking landscape, including Deputy Governor of the South African Reserve Bank, Dr Rashad Cassim; Chief Data & Analytics Officer of FNB, Dr Mark Nasila; and Chief Executive Officer of GoTyme Bank, Cheslyn Jacobs.
Click here to learn more about the conference and secure your tickets today.
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