An analysis on the impact of AI and data analytics in the South African digital banking: Benefits and challenges

Abstract

This paper investigates the benefits and challenges of integrating artificial intelligence (AI) and data analytics in South African digital banking, addressing the research question: What are the benefits and challenges of using AI and data analytics in digital banking in South Africa? Guided by an interpretive qualitative design, the study used semi-structured online interviews with 11 professionals drawn from banks, fintech firms and regulatory institutions, and applied thematic and content analysis to the resulting data. The findings show that AI and data analytics enhance customer experience, improve operational efficiency and support informed decision-making, while key challenges include data privacy and security concerns, high implementation costs, resistance to technological change and legacy-system constraints. A major policy implication is the need for robust regulatory and governance frameworks, combined with targeted skills development and infrastructure investment, to enable ethical and sustainable AI deployment in digital banking. The study offers an original contribution by providing context-specific empirical evidence from an emerging market, extending a literature base that has largely focused on developed economies and informing both policymakers and practitioners on how to optimize AI and data analytics in South African digital banking.