Transforming Banking: South Africa’s Economic Outlook and Fintech Revolution in 2025

This opinion piece by Ademola Oluwaranti covers South Africa's Economic Outlook and Fintech Revolution in 2025.

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Opinion pieces are the opinions of their author and do not necessarily represent the opinions of the IOBSA, its staff, management, board or members.


Article by: Ademola Oluwaranti

Welcome to 2025, IOBSA Members!

As we embark on a new year, let us reflect on the economic landscape of 2024 and look ahead to what 2025 may bring for the global and South African economy. Conflicts
such as Russia’s war with Ukraine, Israel & Hamas, China & Taiwan are among the major conflicts that defined the global economic landscape last year. Similarly, Africa has had its fair share in these conflicts from Sudan, and South Sudan to Mozambique as well as the emergence of military rulers in sub-Saharan Africa. The return of President Donald J Trump to Whitehouse will be defining for 2025 as United States economy is strategic for the rest of the world.

  1. 2024 Economic Performance
    1. Global Economy in 2024 – The global economy demonstrated resilience in 2024, with real GDP growth reaching 3.2%. [Euromonitor International, 2024 Click here]. Despite numerous challenges, the world economy maintained a steady growth as inflation moderated and monetary policy began to ease in key markets. [Euromonitor International, 2024 Click here] [World Bank 2024 Click here for detailed Global Detailed Economic Performance for 2024]
    2. South African Economy in 2024 – South Africa’s economy showed signs of improvement in 2024, with real GDP growth estimated at 1.1% [Deloitte, 2024 Click here]. This growth was supported by reduced load-shedding, subdued inflation, and lower interest rates, which boosted both household and corporate balance sheets [Deloitte, 2024 Click here] [Click here for detailed South African economic performance in 2024. PWC 2024]
  2. 2025 Economic Outlook
    1. Global Economic Projections for 2025 – The global economy is expected to maintain its growth rate of 3.2% in 2025 [Euromonitor International, 2024 Click here]. Emerging and developing economies are expected to grow by 4.4% in 2025, slightly down from 4.5% in 2024, mainly due to expected slower growth in China and Latin America. Euromonitor 2024 notes rising geopolitical tensions, trade protectionist policy and climate shocks represent major upside risks for global inflation and downside risks to the global baseline outlook. However, Inflation is projected to ease further to 3.8%, significantly down from 6.5% in 2024. [Euromonitor International, 2024 Click here]. However, short- and medium-term growth prospects face challenges from rising geopolitical risks and growing policy uncertainty [Euromonitor International, 2024 Click here].
    2. South African Economic Projections for 2025 – The South African economy is forecast to grow by 1.6% in 2025, according to the South African Reserve Bank [SARB 1. Click here; Deloitte 2. Click here ] with the Repo rate remaining at 7.75% till January ending 2025. Inflation is expected to remain largely under control, trending around the 4.5% midpoint [Deloitte, 2024 Click here]. The medium-term outlook has been revised upward, with an average growth of 2% projected over the next three years [Deloitte, 2024 Click here].
  3. Fintech and the Changing Landscape of Banking
    The banking industry is undergoing a significant transformation driven by financial technology (Fintech). As we move into 2025, it is crucial for upcoming bankers to understand these changes and develop the skills necessary to thrive in this evolving landscape. Some of these transformations are:
    1. Open Banking Revolution
      Open Banking is reshaping the financial services industry globally. In the UK, there are now more than 6 million active Open Banking customers [Tuttelberg, 2022 Click here]. This technology provides unique ways to generate and leverage data, offering better insights for financial institutions and improved services for customers [Mangopay, 2024 Click here]
    2. Blockchain and AI Integration
      Blockchain technology and artificial intelligence are making significant impacts in the fintech world. These technologies are being used to improve risk management, fraud detection, and other critical areas of finance [Consult, 2024 Click here].
  4. Implications for South African Banking Sector
    Sequel to the aforementioned in [3] above, the South Africa’s banking sector stands to benefit significantly from embracing Open Banking and other Fintech innovations [Tuttelberg, 2022 Click here]. These technologies can enhance financial inclusion, improve credit assessment processes, and create more personalised banking experiences. Find below two examples of the implications:
    1. Enhanced Financial Inclusion: Fintech solutions can help South African banks reach broader markets and provide services to previously underserved populations. This enables scalable growth, which is vital for sustainability in the banking sector [Strategy&, 2024 Click here]; [Panday et al. 2024 Click here]
    2. Collaboration with Fintech Startups:
      South African banks are actively working with fintech startups through incubator programs. This collaboration helps banks manage disruption risks while fostering innovation in areas such as payment systems and regulatory technology (RegTech) [S & P Global, 2024 Click here]; [Consult, 2024 Click here].

These changes are driving a shift in the skills required for future bankers in South Africa. Consequently, to navigate this evolving landscape, upcoming bankers need to focus on developing expertise in the following major areas; data analytics, digital platform management, cybersecurity, and customer experience design [Mangopay, 2024 Click here]; [G0-Globe, 2023 Click here].

  1. Skills for Future Bankers
    To navigate this dynamic landscape, upcoming as well as future bankers should be intentional to focus on developing skills in the following areas in addition to their banking qualifications at B. Tech and honours level in other to remain competitive in the unfolding banking landscape. These are
    1. Data analytics and interpretation
      Data analytics involves transforming raw financial information into actionable insights that drive strategic decision-making. Proficient bankers will need to understand complex data sets, identify trends, and translate numerical information into clear strategic recommendations for their organisations.
    2. Digital platform management
      Digital platform management requires expertise in navigating and optimising technological ecosystems that support banking operations and customer interactions. Bankers must understand how to leverage digital platforms to enhance customer experience, streamline processes, and ensure seamless technological integration across different banking services.
    3. Cybersecurity and data protection
      Cybersecurity skills are critical in protecting sensitive financial information from increasingly sophisticated digital threats and potential breaches. Upcoming bankers must understand advanced security protocols, risk management strategies, and be able to implement robust protective measures to safeguard customer and institutional data.
    4. Customer experience design
      Customer experience design focuses on creating intuitive, user-friendly banking interfaces and services that meet evolving digital consumer expectations. This skill involves understanding user behaviour, designing seamless digital journeys, and developing innovative solutions that make banking more accessible, convenient, and personalised.
    5. Regulatory technology (RegTech)
      RegTech involves using advanced technologies to help financial institutions comply with complex regulatory requirements more efficiently and accurately. Bankers skilled in RegTech can leverage artificial intelligence and machine learning to automate compliance processes, reduce risks, and ensure adherence to evolving financial regulations.

By acquiring these skills, upcoming and future bankers can position themselves at the forefront of the industry’s transformation and contribute to the growth of South Africa’s financial sector.

Finally, as we enter 2025, the Institute of Bankers South Africa (IOBSA) encourages all members to embrace these technological advancements and continue their professional development (CPD). The future of banking is digital, data-driven, and customer-centric. By staying informed and adaptable, South African bankers can play a crucial role in shaping this future and driving economic growth in the country and beyond. [FinTech and its impact on Banking (Sullivan, 2024) Click here]; [Fintech and its impact on International Business. (Cumming et al, 2023) Click here].

The author, Ademola Oluwaranti is a chartered banker and holds a fellowship designate with the Chartered Institute of Bankers of Nigeria. He is a lecturer, in banking & finance at the Business School of Manchester Metropolitan University UK. He is a Permanent resident of the UK and SA.

Transforming Banking: South Africa's Economic Outlook and Fintech Revolution in 2025

LinkedIn: https://www.linkedin.com/in/oluwaranti-ademola-31ab5434/
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