Big-four bank Absa’s information technology (IT) spend has increased by 14% to reach R3.3 billion.
This emerged yesterday, when JSE-listed Absa announced its interim financial results for the six months ended 30 June.
In addition to South Africa, Absa operates in several other African countries, including Botswana, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria, Seychelles, Tanzania, Uganda and Zambia.
Absa explains that the increase in IT-related costs mainly reflects continuing investment in new digital capabilities, resulting in higher cyber security, software licence and maintenance expenses.
It adds that amortisation of intangible assets grew 8% to R1.4 billion, due to further investment in digital, automation and data capabilities that increased goodwill and intangible assets to R15 billion.
According to Absa, total IT spend, including staff, amortisation and depreciation, increased 12% to R7.8 billion, or 28% of group expenses.
Traditional banks in South Africa are making huge investments in technology in order to maintain dominance in the face of emerging digital banks such as TymeBank, Bank Zero and Discovery Bank.
Technology investment is crucial for the traditional banks to meet modern customer expectations, reduce costs, improve security and compete effectively with the agile digital banks.
Standard Bank, Africa’s largest financial services provider by assets, recently told ITWeb TV that it is spending R25 billion to run its IT operations across the continent.
Like many traditional banks, Absa has been investing heavily in digital transformation to compete with new digital banks and fintech companies. This includes developing mobile and online banking platforms, enhancing cyber security, and integrating artificial intelligence and data analytics into its operations.
Absa, which now has 3.2 million digitally-active customers, adds that it aims to maintain the high stability of the technology estate to minimise incidents impacting customers and operational effectiveness.
“Through technology, we enable employees to have a digitally-enabled way of working, as well as empower them to seamlessly serve our customers,” says the financial services firm.
“We use technology to reach new geographies and grow our diversification of NIR [nominal interest rate] and capital-lite revenue. In continuing our journey to become a digitally-powered business, with a complementary physical presence, we aim to enhance customer and colleague value propositions and increase our speed of execution.”
The big-four bank notes it continues to pursue opportunities to accelerate its digital transformation, supported by modern, agile and reliable technology.
“Accelerating our digital adoption and transaction volumes on our digital platforms, while continuously improving our customer experience, remains a key focus,” it adds.
“We recognise the opportunities that digital will unlock to drive efficiency and improved customer experience as we leverage data and drive innovation and new technologies such as artificial intelligence. We extract value from data insights to drive growth, improve efficiencies, deepen client understanding, increase client-centricity and develop relevant client value propositions.”
The group points out it invested in staff, technology and the brand, with headcount increasing by 1 200 in the first half of the previous year and marketing costs up 17% year-on-year.
Absa believes its digital platforms enable financial inclusion, while building digital skills for the future.
During the reporting period, the bank focused on embedding new self-serve digital features on the Absa mobile banking app and connected banking platform, in a bid to drive an improved customer experience.
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