Standard Bank, Africa’s largest lender by assets, will this year explore the deployment of artificial intelligence (AI) in its operations. It is not looking to be a pioneer in the space, but is positioning itself to be a “fast follower’’.
The bank’s chair, Nonkululeko Nyembezi, said in a letter to shareholders published in the group’s annual report that the group will this year be exploring biodiversity and AI.
“It is clear that AI is by no means only an IT issue, but rather a development that will have profound commercial, economic and social implications,” Nyembezi said.
Credit agency S&P a few months ago said it expected testing of generative AI solutions in the banking sector will accelerate over the next two to five years, while benefits are likely to prove incremental.
Banks worldwide are adopting generative AI, which promises earnings growth, improved decision-making, and better risk management. But S&P has warned that AI also comes with new risks, concerns and costs that banks will have to manage.
One of the risks flagged by S&P is ethical concerns, such as the ability to explain generated content or biases embedded in data. Other AI risks that are particular to the banking sector include security and privacy, as well as issues related to workforce displacement.
“We are making increasing use of process automation and predictive AI and are actively exploring use cases for generative AI. We believe that a ‘fast follower’ stance is appropriate for the group, at least for the time being,” Standard Bank group CEO Sim Tshabalala said.
“Blockchain continues to have the potential to meet some client needs more efficiently, but we have yet to see strong demand for central bank digital currencies and we continue to regard crypto assets as highly speculative.”
Systems outage
The bank’s annual report shows it has made progress in addressing the technical glitches that plagued the bank in 2021 and 2022.
The system glitches came to a head in May 2022 when the lender suffered a six-hour systems outage, leaving thousands of customers unable to swipe cards at point-of-sale devices. Customers could also not draw cash from ATMs.
Shortly after this incident, the bank appointed Margaret Nienaber as COO, in a move largely seen to address the technical failures that were harming the bank’s reputation with customers.
Nienaber said in the annual report that the approach had been to strengthen system stability and security while having “a strong sense of accountability and pride in our work”.
“In 2023, we made significant strides in this direction. Recognising that resilience in the present is as important as future-proof modernisation, we refined our technology strategy to focus on both stability and innovation,” Nienaber said.
“Through effective collaboration between business units and Technology, we addressed the 2022 SA system reliance issues.
“We have witnessed a year-on-year reduction of 60% in the combined number of material incidents across the group and 43% reduction in the average time to resolve incidents. This translates to a 78% improvement in cumulative system downtime year on year,” she said.
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