Absa’s digital push comes with a $540 million price tag
The numbers suggest African banks may be swapping the costs of physical infrastructure for an expensive technology stack.
Absa, a major South African banking group, is expanding its digital banking services but faces a challenge: while adoption is increasing, the cost of running its technology is not decreasing. Digitally active customers rose by 14%, yet the cost-to-income ratio remained high, with technology costs amounting to R8.78 billion ($538.7 million) and an additional R200 million ($12.3 million) impairment on software assets.
The bank serves over 13.4 million customers across its operations in 17 African countries, but the technology expenses have risen to R8.8 billion, or 28% of its R31.4 billion operating expenses in the first half of 2026. Absa has also written down R200 million ($12.3 million) in software assets this year, recognizing that some existing systems have lost their economic value.
The bank attributes these impairments to changes in its strategy, regulatory developments, and the rapid pace of technological change. Absa's digital efforts, while aiming to reduce costs per transaction, have not yet translated into a lower overall cost base due to the scale of its operations and the complexity of technology integration.
Despite the challenges, Absa reported total income of R58.79 billion ($3.61 billion), up 4.1% in the six months to June, with headline earnings per share rising 7.9% and return on equity improving to 15%.
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