Absa, one of South Africa’s big four banks, has significantly ramped up its investment in technology, with IT spending increasing by 14% to reach R3.3 billion for the first half of 2024. This was revealed during the bank’s interim financial results announcement for the six months ending 30 June.
The increased expenditure is part of Absa’s broader strategy to bolster its digital capabilities in response to rising competition from emerging digital banks and fintech companies.
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Absa’s Expansion Across Africa
In addition to its operations in South Africa, Absa has a strong presence in several African countries, including Botswana, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria, Seychelles, Tanzania, Uganda, and Zambia.
The bank’s heightened IT spending reflects its ongoing efforts to enhance its digital infrastructure across these markets. It focuses on developing mobile and online banking platforms, improving cybersecurity, and integrating cutting-edge technologies like artificial intelligence and data analytics.
Absa attributes the rise in IT-related costs to its continuous investment in new digital capabilities. This includes higher expenditures on cybersecurity, software licenses, and maintenance. The bank also reported an 8% increase in the amortisation of intangible assets, totalling R1.4 billion, driven by further investments in digital, automation, and data capabilities. These investments have increased the bank’s goodwill and intangible assets to R15 billion, underscoring its commitment to digital transformation.
Technology at the Core of Competitiveness
As traditional banks in South Africa face growing competition from digital-first challengers like TymeBank, Bank Zero, and Discovery Bank, substantial technology investments have become essential to maintaining market dominance. Absa’s total IT spend, including staff, amortisation, and depreciation costs, rose by 12% to R7.8 billion, accounting for 28% of the group’s expenses. These investments are crucial for meeting modern customer expectations, reducing operational costs, and enhancing security measures.
Absa’s digital strategy is focused on maintaining high stability within its technology estate to minimise disruptions that could impact customers and operational efficiency. The bank’s digital initiatives aim to empower employees through digitally enabled work environments and deliver seamless customer service. By leveraging technology, Absa is expanding into new geographies, diversifying its revenue streams, and accelerating its journey to becoming a digitally powered business with a robust physical presence.
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With 3.2 million digitally active customers, Absa continues to prioritise enhancing customer experiences through technology. The bank has been embedding new self-service digital features on its mobile banking app and connected banking platform to improve customer satisfaction and engagement. Absa recognises the transformative potential of digital innovation in driving efficiency, improving customer experiences, and fostering growth through data insights and artificial intelligence.
In addition to technology, Absa has also been investing in its staff and brand. The bank increased its headcount by 1,200 in the first half of the previous year and saw a 17% year-on-year increase in marketing costs. The bank also continues to explore opportunities to advance its digital adoption and increase transaction volumes on its digital platforms, focusing on continuously improving the customer experience.
As Absa leverages data to drive innovation, it aims to deepen client understanding and develop client-centric value propositions, positioning itself as a leader in the digital banking space.