The global banking landscape is experiencing seismic shifts, driven by the rapid advancement of technology and evolving consumer expectations.
By Eshmael Mpabanga, client account lead in the financial services practice at Accenture, Africa
South Africa, with its robust financial sector and growing technological infrastructure, is positioned to spearhead a transformative revolution in the banking industry through the use of generative AI (GenAI). According to industry reports, AI is no longer a mere tool for automation – it is a dynamic catalyst for growth, innovation, and operational excellence that is reshaping how financial institutions operate, serve customers, and compete in an increasingly digital world.
Most banks think GenAI is a cost-takeout play, but the revenue upside could be the real story here. Nearly every bank role will be transformed in some way and the impact to bottom lines could be eye-popping.
A new Accenture study modeled the impact on the banking industry and found that GenAI could have a significant impact on growth rates in the next three years. For South African banks, this means leveraging AI to unlock new revenue streams and operational cost efficiencies. Consider the following key areas of impact:
- Personalised Client Engagement: GenAI is revolutionising how Relationship Managers (RMs) interact with clients by providing real-time insights that enhance client engagement and retention. By analysing customer data, GenAI is able to deliver predictive insights, such as cash flow forecasts, lending requirements, and investment trends, that are tailored to the specific needs of each client. This personalised approach allows RMs to offer more relevant solutions and services, thereby deepening their relationships with clients and increasing retention rates. For example, a case study involving a major financial institution showed that “RMs armed with GenAI insights can improve client retention and identify opportunities for growth.” By receiving actionable intelligence, RMs are better equipped to proactively address client needs, suggest customised financial solutions, and predict potential challenges before they arise. This level of personalised service – powered by AI – ultimately results in a more satisfied and loyal client base, as clients feel understood and valued by their bank.
- Streamlined Operations: In the context of South African banks, many financial institutions are still dealing with legacy systems and outdated infrastructure. While modernisation is essential for future growth, it can be a lengthy and resource-intensive process. However, GenAI technologies are already helping banks streamline this process and reduce the costs associated with system updates. One example of this transformation is Accenture’s Reverse Engineering Asset, a solution powered by GenAI that has already reduced legacy system documentation efforts by 50%. By automating the documentation of complex legacy systems, GenAI enables banks to accelerate the modernisation of their technology infrastructure, freeing up valuable resources for innovation. This reduction in time and effort is vital for South African banks, which often face the challenge of managing both modern solutions and legacy systems.
- Enhanced Decision-Making: GenAI is also significantly improving decision-making processes within financial institutions. Banks are increasingly relying on AI-powered dashboards and predictive analytics to enhance their ability to forecast risks, optimise pricing strategies, and monitor compliance. These tools provide real-time, data-driven insights that enable banks to make smarter, more informed decisions, minimising the likelihood of errors and inefficiencies. For instance, AI-driven predictive analytics can help banks identify potential risks before they escalate into costly issues. By analysing historical data, market conditions, and customer behaviour, AI can anticipate risks such as loan defaults, liquidity issues, or market volatility, allowing banks to take proactive measures. This predictive capability is particularly valuable in a volatile financial environment where timely, informed decisions are critical to maintaining stability.
In terms of compliance, GenAI has proven to be a powerful tool in minimising errors and ensuring regulatory adherence. For example, one study revealed that “GenAI-driven solutions in compliance have reduced regulatory errors by up to 92%”.
By automating compliance tasks such as document review, transaction monitoring, and regulatory reporting, AI helps banks reduce the risk of human error and ensure they meet evolving legal requirements. These AI-driven solutions are not only faster and more accurate but also more cost-effective, reducing the need for extensive manual oversight and enabling compliance teams to focus on higher-level tasks.
To fully realise the potential of GenAI, South African banks must adopt a structured approach. The first step is to prioritise use cases. Banks should begin with high-impact, low-complexity initiatives such as automating back-office processes and enabling personalised customer interactions. These initiatives will help build momentum and create a foundation for further advancements.
Investing in infrastructure is also crucial. A scalable, open-source architecture ensures that AI models integrate smoothly into existing systems while also future-proofing investments. This will allow banks to adapt and grow alongside evolving technological landscapes. Another essential step is empowering talent. Banks should invest in training their employees in areas like prompt engineering and other AI-related skills. This ensures that human expertise can complement the capabilities of AI, creating a more effective and efficient workforce.
Looking to the global stage, South African banks can learn valuable lessons from those already leveraging AI. For example, a leading international bank used AI-powered legacy system migration tools to cut modernisation timelines by 50%. Additionally, AI-driven solutions for onboarding and underwriting helped reduce operational inefficiencies by 30%, leading to significantly improved client satisfaction.
This technological evolution presents a unique opportunity for the country to bridge the gap between financial inclusion and profitability. GenAI won’t change banking – it will change how banking is delivered. By simplifying operations and enhancing customer experiences, South African banks can solidify their role as enablers of economic growth.