The Rise of Digitization in South Africa

Author: Zina Ngoni

It is only the end of May, but South Africa may have had one of the most eventful semesters in history. Noteworthy events include the elections and inauguration of The President, the launch of three new digital banks and an announcement by Standard Bank that the banking giant will be closing some of its branches and subsequently laying off some of its employees in a bid to move its clientele to digital banking platforms.

The launch of the new digital banks in South Africa presents new and tremendous competition for the “Big Five” banks. Tyme Bank, Bank Zero and Discovery Bank are digitized banks mainly characterized by branchless, app-based banking. According to BusinessTech, these new banks are sure to disrupt the status quo and competitively challenge traditional banking in the financial services. However, not all these banks are likely to survive in South Africa because not only is the population not technologically savvy, but there is also a very small portion of the population that banks.

In analyzing the move to digitization, two important questions may be asked, namely:

  • Will the South African infrastructure be able to handle this rapid technological change?
  • What kind of leadership will be needed to ensure the successful integration of the economy (and civilians) to a more digital economy?

Even though digitization can potentially increase economic growth in South Africa, there are still some concerns about the level if infrastructure whose development is every slow despite the government’s fiscal efforts.

The benefits of digitization include an increased level of production and innovation. According to Accenture, with digitization economic growth could potentially increase by 2030 to 4.5% with artificial intelligence (the percentage is 3.5% without AI). Those are quite high percentages considering the current pace at which the South African growth.

However, our educational infrastructure is both weak and outdated; furthermore, there still is a very low number of data scientists in South Africa.  Accenture further adds that South African data privacy and protection laws create a bit of skepticism regarding the migration from manual banking to digitized banking—data privacy builds trust and lowers the “paranoia” that comes with banking without any personal interaction.

Moreover, the South African government does not fully understand artificial intelligence. This may be attributed to the fact that the economy is still in the developmental phases. It is one thing to have initiatives at schools and have a cabinet ministry dedicated to science and technology and another thing to actually integrate such technological initiatives into the real economy (and subsequently reap the benefits for both the population and businesses).

There needs to be a shift in leadership in South Africa to advance digitization, not only for corporations but also in the political environment as well. Digitization requires leaders whose character traits include curiosity and innovation. In the long run, AI will not be an “other” in planning and implementation of the strategy but will become the core element of the strategy. Currently, one may reasonably argue that the political landscape is not accommodating of AI. Leaders, according to the Harvard Business Review need to be highly adaptive, have humility and constant engage with the stakeholders involved in driving AI forward.

A huge amount of work still needs to be done in South Africa (and Africa) to catch up with the rapid change in technology. The new minister of technology therefore has some working to do to ensure that this aspect of growth is driven forward. One therefore needs to watch the technological space for the next five years, with the hope that this will change positively.


Chamorro-Premuzic, T., Wade, M. & Jordan, J., 2018. HBR. [Online]
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Gordon Institute of Business Science, 2018. Accenture. [Online]
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Sithole, B., 2018. Memeburn. [Online]
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Writer, S., 2019. Business Tech. [Online]
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