Lead1026

Leading through the shift

Busi Radebe is the General Manager for Media and Digital Technology at Frank Dialogue Holdings.

BANKING

Busi Radebe explores what South Africa’s major banks reveal about building resilience, making choices, and navigating uncertainty

South Africa entered 2026 with cautious optimism as more reliable electricity, logistics reform, a steadier fiscal trajectory, and favourable sovereign rating actions began to rebuild confidence. That momentum was disrupted by the Middle East conflict, which unsettled energy markets, while inflation reached 5% in June before easing to 4.3% in July. The Reserve Bank also raised the policy rate by 25 basis points in May, interrupting expectations of continued easing, while second quarter GDP contracted by 0.2%, with trade, manufacturing, and mining among the main drags despite continued growth in household consumption.

Against that backdrop, South Africa’s six major banks - Absa, Capitec, FirstRand, Investec, Nedbank, and Standard Bank, reported com-bined headline earnings of R82.3 billion for the first half of 2026, up 9.3% year on year. Return on equity rose to 20.5%, while capital and li-quidity remained strong. On the surface, these are numbers about financial resilience and they can be considered as useful for leaders, as they show how large institutions respond when the assumptions behind their strategies begin to change.

On the surface, these are numbers about financial resilience and they can be considered as useful for leaders, as they show how large institutions respond when the assumptions behind their strategies begin to change.

The results however are about more than balance sheets and they illustrate what discip-lined leadership looks like when the external environment refuses to remain predictable. The six banks do not share identical business models, customer bases or geographic expos-ures, yet they faced many of the same pressures. What stands out is not simply that the sector remained profitable, but that dif-ferent capabilities could be brought into play as conditions shifted.

Resilience is built before the crisis

Resilience is often described as a personal quality, but at an institutional level it is shaped by architecture, including diversifica-tion, capital allocation, relationships, techno-logy, people, and the ability to act before pressure builds.

That is one of the clearest messages from the results. Performance was supported by a range of businesses, including retail and business

banking, wholesale activity, trading, markets, payments, insurance, and merchant services, alongside disciplined cost management. PwC’s analysis identifies this breadth as central to the banks’ resilience as the expected benefits of lower inflation and interest rates gave way to a more uncertain global environment.

PwC’s analysis identifies this breadth as central to the banks’ resilience as the expected benefits of lower inflation and interest rates gave way to a more uncertain global environment.

The numbers elucidate the point as interest income fell 4.3% as lower average rates and competitive deposit pricing weighed on margins, while non interest revenue rose 8.6%, supported by transactional activity, payments, insurance, merchant services, and client driven markets income. The lesson extends beyond banking. Diversification is not some-thing to pursue once the core business is under pressure. It is built years earlier, when there is still time and capital to create alternative sources of value.

That is difficult leadership work. Investing in future capability is hard to justify when the existing business is performing well. Yet today’s successful model may eventually meet conditions it cannot control. Diversification is not about predicting the next disruption. It is about ensuring the organisation has more than one way to create value when circum-stances change.

The client relationship is the real battleground

Competition across retail, business, and cor-porate banking has intensified. Digital trans-action volumes have risen, and operating mod-els have moved closer to customer segments, with greater accountability around the rela-tionship itself. The strategic objective is to use data, distribution, and product breadth to cre-ate simpler experiences and deepen relation-ships across banking, payments, insurance, and investment.

Payments matter because their value goes beyond transaction fees. They give institutions access to customer behaviour and create oppor-tunities in working capital, insurance, analytics, and value added services. As real time and embedded payments develop, compet-ition is becoming less about owning an individual product and more about becoming the primary relationship through which cus-tomers manage their financial lives.

In focus

They give institutions access to customer behaviour and create oppor-tunities in working capital, insurance, analytics, and value added services.

The wider lesson is that as technology makes products and services easier to access, compare, and replicate, the strength of an organisation increasingly lies in the depth of its customer relationships. Understanding a customer over time provides context which is something that cannot be achieved by data alone. Data can show what a customer has done, while a strong relationship can help explain why they did it and anticipate what they may need next.

This is why the idea that digital transforma-tion makes human relationships less important is too simplistic. Routine banking is increasingly suited to self service and AI assisted channels, but human judgement remains valuable in financial distress, complex decisions, disputes, and high value transac-tions. Banking is becoming both more digital and more human.

AI is now an operating question

Artificial intelligence has moved beyond the stage where a pilot alone demonstrates innov-ation. The major banks already use AI and in-telligent automation in client engagement,

BANKING

Busi Radebe

fraud management, credit decisioning, soft-ware development, and employee productivity. The important question is not how many AI use cases an organisation has, but what those use cases are actually changing.

Technology investment can create the appearance of transformation through new systems and initiatives. The real measure is whether customers receive better service, decisions are faster, fraud is prevented more effectively, employees are more productive, and the investment generates sustainable value.

The foundations behind AI are less visible but critical. They include trusted data, modern architecture, cloud infrastructure, governance, and skilled people. Its value depends on how well it is integrated into core processes, with clear accountability and human oversight.

The important question is not how many AI use cases an organisation has, but what those use cases are actually changing.

The leadership challenge is deciding where technology should automate, where it should support human judgement and where people must remain accountable.

AI can improve a strong process, but it can also amplify a weak one. Its value will ulti-mately depend on how well organisations embed it into the way they work.

The customer often signals trouble before the numbers do

The results also show why leaders must listen closely to changes in customer behaviour. The combined credit loss ratio rose to 199 basis points from 185, with corporate portfolios gen-erally healthier while retail portfolios reflected household pressure.

The consumer story is revealing because eco-nomic pressure rarely arrives in one dramatic event. TransUnion’s Q1 2026 Industry Insights report found that South African consumers were changing how they accessed and used credit as affordability pressures persisted. They relied more on existing credit facilities and shifted towards more accessible lending products to manage short term liquidity.

For financial institutions, these are early signals. Payment behaviour, arrears, and chan-ging credit use can show pressure building before it appears in headline results. The same applies elsewhere. Complaints, declining engage-ment, changing purchasing patterns, employee turnover, and unusual operational behaviour can all indicate that something is shifting.

Leadership is partly an exercise in noticing what has not yet become a crisis. By the time a problem is obvious in an annual report, options may be fewer. It is therefore the organisations with strong feedback systems and a culture that surfaces uncomfortable information early can adjust while adjustment is still affordable.

Transformation cannot stop at the organisational chart

Several banks have redesigned their operating models around customers, productivity, and technology, including through reorganisations and acquisitions. The aim is to simplify opera-tions, improve decisions, strengthen account-ability, and deepen cross selling.

It is therefore the organisations with strong feedback systems and a culture that surfaces uncomfortable information early can adjust while adjustment is still affordable.

But changing structure does not necessarily change how an organisation works. Real trans-formation comes from removing duplication, improving productivity and changing how people make decisions, collaborate, and serve customers. The value of restructuring is ulti-mately measured by what becomes simpler, faster, and better.

Africa requires scale without losing proximity

The banks’ continued expansion across Africa presents a more complex leadership challenge. Operations beyond South Africa provide access to faster growing markets, rising demand for financial services, and favourable demograph-ics. Growth can come through organic invest-ment, partnerships, customer segment models, and selective acquisitions.

But expansion also brings greater complexity. Currency movements, sovereign risk, liquidity constraints, and different interest rate cycles can create volatility. Acquisitions bring an-other challenge which is integration. While standardising systems and structures can cre-ate consistency, moving too quickly can weaken local knowledge, entrepreneurial agil-ity, and customer relationships that made the business attractive in the first place.

The issue is not whether to integrate, but what to integrate and what to protect. Successful leadership requires enough standardisation to create scale and enough flexibility to preserve local intelligence. That balance matters in Africa, where markets can differ significantly even within the same regional growth story.

Strength creates choices, not certainty

The banks continue to benefit from strong cap-ital and liquidity. The combined common

equity tier one ratio stood at 16.3%, providing capacity to support organic growth, invest in technology, return capital, pursue selective ac-quisitions, and respond to regulatory change.

Capital strength should not become a substi-tute for strategic discipline. Its greatest value is the choices it creates. An institution with fin-ancial capacity can decide where to invest, which opportunities to pursue, and which risks to absorb.

The leadership challenge is making those choices deliberately rather than simply because resources exist.

Strength is not simply about the resources an organisation has accumulated, but about its capacity to deploy them when circumstances change. Financial resources matter, but so do capable people, trusted relationships, reliable information, effective technology, and the ability to make decisions quickly. Together, these capabilities create the flexibility to respond to uncertainty and act when new opportunities or risks emerge.

The leadership question beyond resilience

The first half of 2026 shows a banking sector that remains financially resilient while operat-ing in a far more complicated environment than many expected. Earnings remained diver-sified, capital, and liquidity remained strong, technology investment continued, and pay-ments, regional expansion, and new operating models created additional routes to value.

In focus

Strength is not simply about the resources an organisation has accumulated, but about its capacity to deploy them when circumstances change.

But resilience should not be the final objective. The next competitive cycle will be determined by whether institutions can convert resilience into relevance, technology into meas-urable value, and scale into stronger relationships. It will require leaders to recog-nise changing customer behaviour early, invest in capabilities before they become urgent, and maintain accountability as AI becomes more embedded in decision making.

The most important lesson is that leader-ship in uncertainty is not about predicting every disruption correctly. It is about building an organisation that can adjust without losing sight of its purpose. The banks entered 2026 with one set of assumptions and encountered another. Diversified busi-nesses, capital strength, technology, customer relationships, and operational capability gave them room to respond.

That is what makes the results relevant beyond banking. Resilience is not simply with-standing pressure once it arrives. It is the product of choices made when there is no immediate crisis, when investment in capab-ility competes with the temptation to optimise the present, and when the value of preparation is not yet visible.

South Africa’s major banks have shown that resilience can protect performance in a difficult environment. The harder test is whether they can turn it into simpler customer experiences, stronger productivity, and sustainable growth. In an economy where uncertainty remains part of the operating environment, that may be the leadership capability that matters most.

BANKING

In an economy where uncertainty remains part of the operating environment, that may be the leadership capability that matters most.

BANKING

The consumer story is revealing becauseeconomic pressure rarely arrives in one dramatic event