AI is moving from experimentation into core banking, while payments and digital platforms become increasingly important sources of growth. (Image created via Gemini)
South Africa’s major banks are embedding artificial intelligence (AI) deeper into their operations, as they shift digital transformation beyond technology rollouts towards measurable financial outcomes.
According to PwC South Africa’s Major Banks Analysis for the first half of 2026, the banks are moving beyond technology deployment and digital channel migration towards using emerging technology to strengthen customer relationships, accelerate decision-making, improve fraud prevention and reduce operating costs.
The analysis covers the combined local currency results of Absa, Capitec, FirstRand, Investec, Nedbank and Standard Bank, based on results published during the first half of 2026, which recorded combined banking headline earnings growth of 9.3% year-on-year to R82.3 billion.
According to the report, as local banks continue to invest heavily in AI, data, cloud infrastructure, cyber security and payments capabilities, transformation is becoming increasingly embedded in core business operations rather than treated as a standalone programme.
PwC says the focus is shifting from the number of AI use cases being implemented, to whether these investments generate tangible improvements in customer outcomes, revenue opportunities, decision-making speed and sustainable efficiency.
The focus is consequently moving towards outcomes such as faster service delivery, stronger fraud prevention, and improved credit decisions and lower operating costs.
Yusuf Bismilla, PwC South Africa technology partner, says AI is increasingly being incorporated into banking operations, although financial institutions are still refining how they assess the returns from these investments.
“AI is moving quickly into the operating fabric of banking. Its value will be determined by how well it is embedded into end-to-end processes, underpinned by trusted data, strong governance and controls, explainability, accountability and effective human oversight. While AI adoption continues to accelerate, many banks continue to refine how they measure and realise value from these investments.”
PwC says technology modernisation, payments capabilities, operating model changes and regional expansion are creating new opportunities for the banks, while also raising expectations around what these initiatives should deliver.
From AI experiment to execution
According to the report, AI is being applied across a growing range of banking functions, including fraud management, lending, software development, customer engagement and employee productivity.
The emphasis is increasingly on integrating these capabilities into established workflows and decision-making processes, rather than running them as isolated technology experiments.
PwC identifies cloud migration, modern data architecture, data quality, governance and workforce skills as important components of this expansion.
Bismilla adds that the ability to derive value from AI will depend on how technology is combined with institutional and customer knowledge.
“Ultimately, the banks that will realise the greatest benefit from AI are those that combine the technology with deep knowledge of their customers and markets, and the expertise of their people, to improve decision-making, enhance customer outcomes and strengthen risk management.”
PwC also points to a changing balance between automated and human-led banking services. Routine interactions are increasingly moving towards self-service and AI-assisted channels, while human expertise remains relevant in areas involving complex advice, fraud disputes, problem resolution and customers experiencing financial distress.
This places greater emphasis on how banks redesign processes around AI, rather than simply adding AI functionality to existing systems.
SA’s major banks told ITWeb early this year that they are entering a new phase in their AI journey in 2026, shifting from pilot projects and isolated experiments, to large-scale deployment across core operations.
Standard Bank says it is shifting its AI strategy from experimenting with individual tools and use cases, to embedding AI as a core organisational capability.
Nedbank, meanwhile, is testing a new hybrid banking model that combines self-service technology, digital on-boarding and human assistance in retail environments, as banks rethink the role of traditional branches.
Payments become strategic
According to PwC, payments and merchant services are becoming increasingly important to banks’ broader technology and growth strategies, as financial institutions seek to capture more of the transactions flowing through customers and businesses.
The report highlights increased investment in merchant services, acquiring capabilities and related businesses, including through partnerships and acquisitions. These activities can give banks access to transaction flows and associated data, creating opportunities to extend services into areas such as working-capital finance, insurance and analytics.
“The expansion of real-time and embedded payments is also changing the competitive environment, with banks and non-bank financial services providers competing for broader customer relationships rather than individual financial products.”
Francois Prinsloo, PwC Africa banking and capital markets leader, says payments form part of a broader restructuring of how banks generate growth.
“The South African banking sector is actively reshaping how it grows. Client segment operating models, merchant and payment capabilities, selective acquisitions, technology modernisation and regional expansion all point to more connected and diversified sources of value. The next phase will be judged less by the initiatives announced and more by the client, commercial and productivity outcomes they produce,” notes Prinsloo.
Payments are also strategically relevant beyond transaction fees because they can help strengthen deposit relationships and give banks access to data generated through customer transactions.
SA’s payments landscape is, meanwhile, being shaped by the South African Reserve Bank’s Payments Ecosystem Modernisation Programme, which is aimed at supporting faster, simpler, more inclusive and secure digital payments.
For the banks, the next phase of digital transformation therefore centres on converting technology capabilities into measurable improvements across customer service, productivity, risk management and financial performance, notes PwC.
“This will take place alongside continuing cyber security and fraud risks, meaning banks will have to balance greater automation and connectivity with controls designed to manage the risks associated with increasingly technology-dependent operations,” states PwC.
