Most of South Africa’s five largest banks are increasing their spend on IT – excluding staff costs – in single-digit percentages, their most recent full-year financial results show.

However, Capitec – although not the biggest spender in absolute terms – bucked the industry trend by increasing its spend by 32% year on year for the 12 months ended 28 February 2025 to R2.5-billion. According to Capitec’s annual report, an almost 40% increase in cloud costs contributed to the rise in total IT spending.

“The increase stems from continued investment in systems and platforms. The cloud-based computing fees increased by 39% as we continued to invest in housing data in the cloud. This unlocks efficiencies in our systems and allows us to scale our operations more easily,” said Capitec.

Cloud modernisation has been a core focus of the banking sector in recent years, with large migration projects across the sector. Speaking at a roundtable event at an Amazon Web Services summit in Sandton last week, Capitec chief technology officer Andrew Baker said that although the bank still makes use of on-premises infrastructure, the migration of critical functions to the cloud has helped improve security while minimising the risk of fraud.

According to Baker, all payments made from Capitec accounts are put through a number of security checks, with those that are deemed to be suspicious removed from the payment processing pipeline for further scrutiny. Users are then sent a message alerting them of the payment being paused while further checks are being made.

Modernisation

Other banks’ IT spending increased more in line with inflation. Nedbank’s comparatively modest 7% year-on-year IT spending increase – to R7.4-billion – is mostly due to the completion in 2024 of its IT modernisation programme. Nedbank predicts its IT spend will remain stable from some time now that the project is complete.

“Last year saw the fundamental completion of our ‘managed evolution’ IT transformation, which has delivered a refreshed modern technology platform. This platform, along with our enhanced digital capabilities, supported ongoing strong digital growth,” said Nedbank.

Read: Standard Bank rolls out next-gen virtual credit card

As South African banks mature in their cloud capabilities, new use cases based on machine learning and artificial intelligence are coming to the fore. Capitec’s fraud detection system, for example, makes use of an AI chatbot to facilitate the interactions with clients, who will then provide metadata about the “suspicious” beneficiary they are trying to transact with.

The AI is capable of a host of other anti-fraud techniques, including determining the average amount paid to a beneficiary and flagging any new transactions that are significantly larger, for example.

Bank	Reporting period	2024 (R-billion)	2023 (R-billion)	% change
Absa	31 December 2024	6.8	6	13
Capitec	28 February 2025	2.5	1.9	32
FirstRand	30 June 2024	10.9	10	9
Nedbank	31 December 2024	7.4	6.9	7
Standard Bank	31 December 2024	12.7	12.4	2

Data analytics is another technology whose importance is growing within the sector, especially as banks look to personalise their services further to give their customers tailored offers and experiences.

Absa Group, whose total IT spending (excluding staff costs) grew 13% year on year to R6.8-billion for the year ended 31 December 2024, said it directed a significant portion of its spending towards data analytics.

“We continue to invest in technology to strengthen our digital offerings across all segments and use advanced analytics to enhance our clients’ digital experience,” said Absa.

FirstRand – parent to First National Bank and Rand Merchant Bank – saw its IT costs rise by 9% to R10.9-billion for the year ended 30 June 2024, the most recent full-year reporting period available at the time of publication.

Standard Bank’s 2% rise in IT spending to R12.7-billion – excluding staff costs – does not take away from the fact that the group remains the largest IT spender in South Africa’s banking sector by some distance. Like the other banks, Standard Bank has been experimenting with new technologies like AI. However, core IT functions and cybersecurity continue to be a priority.

Read: AI-led digital banking fraud is surging in South Africa

“Our ability to do business depends on the integrity of the group’s data and information assets and the protection of client privacy. The stability, security and speed of our IT systems is central to our ability to deliver against our purpose and strategy,” said Standard Bank. – © 2025 NewsCentral Media

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