Absa Group’s decision to take a R2.4-billion software impairment hit for the year ended 31 December 2025 is not solely because of AI – itself an accelerator of software obsolescence – but also due broader technological trends and a strategic shift in the bank’s outlook on technology.
According to Absa Group CTIO Johnson Idesoh, speeding up Absa’s technology modernisation drive is core to the decision as fast-changing customer expectations drive the need for greater flexibility in the IT environment.
TechCentral reported earlier this month that Absa Group wrote off R2.4-billion in software assets after a revision of its overall strategy led to changes in investment priorities and faster-than-expected technology obsolescence.
The impairments were more than 13 times the R179-million written off a year earlier and were spread across the group. Head office, treasury and other operations took the biggest hit (R1.1-billion), followed by personal and private banking (R611-million), corporate and investment banking (R559-million), Africa regions (R63-million) and business banking (R43-million).
“While AI accelerates infrastructure and software obsolescence, it is just one part of the wider trend of fast-paced technological changes,” Idesoh has told TechCentral.
“Past paradigms for the life of technology have shifted and technology cycles are accelerating as developments in platforms, cloud, data, cybersecurity and AI accelerate.”
Fundamental shift
Absa and its peers in the banking sector have been engaged in multi-year IT modernisation efforts that have seen IT spend surge across the sector.
The oldest and largest of the banks are among the biggest spenders, since more their infrastructure was built on legacy platforms. Absa spent R16.7-billion on IT, including staff costs, in the year ended 31 December 2025 – and this likely to continue to increase further. “Absa is not pulling back on technology investment,” said Idesoh.
Read: Absa impairs R2.4-billion in software after strategy rethink
For banks, much of their modernisation efforts speak to a shift away from the on-premises, mainframe architectures the banking sector was built on and towards cloud computing. That is why the IT spend of newer banks, which were built on cloud-native architectures from the start – banks such as Capitec and GoTyme – is considerably lower than their older rivals. Capitec, for example, spent “just” R2.6-billion on IT, excluding staff costs, in the year ended 28 February 2025, compared to R14-billion at Standard Bank and R7.1-billion at Absa.
Artificial intelligence is accelerating a push into the cloud in the banking sector – and across the entire economy.
One reason is that AI workloads are easier to handle in cloud environments.
The second is that hyperscalers such as Amazon Web Services, Google Cloud and Microsoft Azure have made significant investments in the development of AI tools and software. Companies would rather leverage those than waste time and money trying to build their own.
According to Idesoh, this impacts the speed at which enterprises can respond to changes in the market and deploy new solutions.
“To support our ongoing advancement, we engage specialised third-party suppliers that demonstrate leadership in specific technological domains. For example, our recently renewed partnership with AWS and Huawei allows us to leverage cloud solutions for improved digital service delivery. We use a disciplined approach to decide whether to build, buy or partner, ensuring each decision fits our strategy and business model while quickly delivering value,” Idesoh told TechCentral.
The Absa CTIO said this strategy aims to refine the bank’s technology estate to prioritise scalable, secure and innovative technology, helping position the bank “for greater value and agility in the future”.
Obsolescence
Although Absa acknowledges that AI is contributing to a faster rate of software obsolescence in the banking industry, its market-wide effects are yet to be fully realised.
Investors have become concerned that AI models, such as Anthropic’s Claude, will eliminate the need for specialised business software. Companies either ask AI to perform the tasks currently handled by vendor software, or they prompt AI coding agents from Anthropic, OpenAI or Google, to “vibe code” bespoke software tailored to their needs.
Read: Standard Bank IT bill tops R14-billion as software spending shifts
Businesses will no longer need to buy expensive software from traditional vendors such as Salesforce, ServiceNow and Microsoft, or from the hundreds of smaller, niche firms offering legal tech, procurement systems or financial planning software.
Although AI is a keen focus for Idesoh and the team at Absa, matters related to traditional IT estate management take priority.
“Our approach fits closely with our technology plan to simplify system architecture, quickly shift to cloud-native platforms and phase out old legacy systems that no longer match our future goals or keep pace with the fast-changing customer expectations and technology environment,” said Idesoh. – © 2026 NewsCentral Media
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