Nedbank, one of South Africa’s big-four banks, has officially wrapped up its nine-year-long “Managed Evolution” IT modernization project.
Speaking to ITWeb following the announcement of the bank’s financial results for the year ending December 31, Chief Operations Officer Mfundo Nkuhlu reflected on the journey, highlighting that Nedbank has invested a staggering R11.7 billion into this massive IT refresh initiative since its launch in 2016.
The goal of the transformation was clear: replace outdated legacy systems with a cutting-edge, modular, cloud-based, and API-driven architecture. By doing so, the bank aimed to enhance efficiency, scalability, and innovation—critical components in staying competitive in today’s fast-moving fintech space.
Strategic Milestone Amid Economic Challenges
Despite economic headwinds, Nedbank CEO Jason Quinn emphasized that the bank achieved major strategic wins throughout 2024.
“One of the standout moments this year was reaching the final stages of our Managed Evolution IT transformation, delivering a modernized technology platform,” Quinn noted.
He added that this upgraded system—combined with the bank’s advanced digital capabilities—has driven strong digital adoption, leading to higher customer satisfaction, an increase in primary banked clients, and greater cross-sell opportunities.
A New Chapter: AI and Emerging Tech in Focus
With the successful completion of its core banking platform at the end of last year and the rollout of digital onboarding for home loans and vehicle financing finalized in March, Nedbank is shifting its focus to the next frontier: artificial intelligence (AI).
“We may have completed the Managed Evolution program, but that doesn’t mean we stop innovating,” Nkuhlu stated. “Technology is an ever-evolving space, and we’ll continue investing in emerging trends, including AI and generative AI (GenAI).”
Looking ahead, the bank has set aside R2 billion per year to fund new technology investments.
Additionally, Nedbank has finalized its target operating model—a key initiative aimed at optimizing costs. By implementing this model, the bank has already realized benefits worth R5 billion.
Accelerating Digital Growth
Nedbank is now laser-focused on digital channels. In the retail sector, the bank is seeing a rapid uptick in the use of the Nedbank app, while business clients are increasingly turning to the Nedbank Business app.
Currently, 65% of all retail sales flow through digital platforms, with an ambitious goal to push this to 75% by year-end. The bank has also seen a surge in primary banked clients originating from digital channels.
One of the key advantages of this transformation is the ability to harness data for strategic decision-making. “Our priority now is leveraging data and analytics to craft more tailored solutions for our clients,” Nkuhlu explained.
To support this initiative, Nedbank has established a dedicated data and insights team. Their role is to bridge the gap between frontline business operations, technology teams, and risk management, ensuring data is not only monetized but also safeguarded.
“We are now tapping into AI-driven capabilities—including GenAI, machine learning, and robotic process automation—to accelerate innovation, optimize costs, and streamline operations,” Nkuhlu added.
Tackling Challenges and Achieving Digital Wins
One of the biggest hurdles in executing this massive transformation was securing the right tech talent. “Finding skilled professionals was a challenge, but we’re proud that we delivered the project on time,” Nkuhlu noted.
Nedbank’s digital transformation is already yielding impressive results:
- Retail digital transaction volumes and values in South Africa surged by 12%.
- Digitally active retail clients grew by 7%, reaching 3.1 million—70% of total main-banked clients.
- Digital adoption in Nedbank’s Africa regions rose from 64% to 72% of the total active client base.
- Active Nedbank Money app users increased by 14% to 2.7 million in 2024, with transaction volumes jumping by 16% and transaction values climbing by 21%.
Strong Financial Performance
Nedbank’s financial results reinforce its digital success. The bank’s headline earnings rose by 8% to R16.9 billion, while diluted headline earnings per share jumped by 11%. Return on equity (ROE) improved from 15.1% to 15.8%, reflecting steady progress toward its long-term targets.
This earnings growth was fueled by strong non-interest revenue, lower impairment charges, and disciplined cost management—helping offset sluggish loan growth and margin pressures.
Additionally, Nedbank’s balance sheet remains robust, allowing it to declare a final dividend of 1,104 cents per share—an 8% increase—at a payout ratio of 57%.
With its IT overhaul complete and a renewed focus on AI and data-driven innovation, Nedbank is positioning itself as a tech-forward leader in the banking sector.
