The Blood Sport of Banking: How South Africa’s Institutions Are Sleepwalking into Irrelevance
In a world where the global economy is being rewritten by decentralized, digital currencies, it’s astonishing to see South African banks still clinging to their dusty, outdated techniques. While the rest of the world is racing to adopt blockchain, digital currencies, and unified ledger technologies, our local banks are stuck in a time warp.
The figures are staggering: 44 countries are currently piloting central bank digital currencies (CBDCs), and 134 countries (representing 98% of the global economy) are actively exploring digital versions of their national currencies. Meanwhile, our own South African Reserve Bank (Sarb) has been slow to react, releasing a Digital Payments Roadmap in April and investigating the feasibility of a CBDC as electronic legal tender for general-purpose retail use.
But what’s even more astonishing is that, despite the opportunities presented by digital currencies, local banks are showing no interest in embracing the future. The likes of Luno have reported that Pick n Pay customers are now spending over R1 million a month on groceries using cryptocurrencies, up from a mere R25 000 just a year ago. And yet, our banks remain lukewarm to the prospect of joining the digital revolution.
The reasons for this apathy are varied, but it’s likely due to the banks’ primary focus on their existing core systems and processes. Transitioning to new crypto-based payment rails and technologies requires significant investment and effort, which they may be reluctant to undertake, especially if their current systems are functioning (if not always optimally).
But by not adopting these technologies, banks risk missing out on significant opportunities. Companies like Wise and Ripple are already using crypto rails to facilitate cross-border transfers and remittances, allowing for speed, cost, and accessibility that traditional banking systems can only dream of. By not embracing these innovations, our banks may be stuck in the slow lane, unable to keep up with the pace of change.
The warnings signs are clear: the current banking system is ripe for disruption. Banks that don’t adapt will be left behind, struggling to keep up with the likes of fintech companies that are nimbly exploiting the digital landscape. The writing is on the wall: it’s time for our banks to join the 21st century or risk being left in the dust.
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