Regulators, innovation clash in African financial sector

Africa’s financial sector is in the midst of a pronounced technological transformation, with digital innovation now being central to organisations’ competitive strategy.

However, firms struggle to fully mature their tech adoption and face hurdles in developing a pipeline of necessary tech talent.

This is one of the key findings of the African Financial Industry Barometer 2025, released this month by Deloitte, in partnership with the Africa Financial Summit.

The fifth edition of this annual survey of more than 70 banking, insurance, fintech and capital market firms across the continent reveals African financial institutions are prioritising digital transformation, artificial intelligence (AI) and cloud, yet talent and adoption gaps remain.

At the core of the industry’s shifting priorities is a clear recalibration toward technology as foundational infrastructure, not just product innovation, according to the study.

See also

“Africa’s financial sector embraces technology, but talent constraints and uneven adoption challenge institutions seeking operational and strategic innovation. Digital transformation is seen as a key lever for improving financial performance and customer experience, with 81% of respondents citing it as a priority for their 2026 strategy,” the report notes.

The barometer’s findings show significant strides in cloud adoption and digital maturity, although this is uneven across subsectors. While fintech firms continue to lead in digital innovation − with a majority classifying themselves as digital leaders − traditional banks and insurers are rapidly closing the gap.

Banks: 45% now consider themselves advanced in digital technology, though 35% still see themselves as followers.

Insurers: 59% occupy advanced digital positions, representing the fastest year‑on‑year improvement in the sector.

Fintech firms: Remain the most mature digitally, with 67% of respondents being in the leader category.

According to the research: “These gains reflect a shift from digital experiments toward operational deployment: technology is increasingly used to underpin core functions like fraud detection, risk management and customer servicing, rather than just customer‑facing novelty.”

AI is emblematic of this shift. The barometer highlights that executives view AI not merely as a fringe innovation, but as a core operational tool.

“Executives expect AI to have a strong or transformative impact across key functions, with 77% citing it for fraud detection and 70% pointing to operational process optimisation.”

However, wide recognition of AI’s potential contrasts with the pace of deployment seen in many markets.

While past barometer editions noted that only a small minority of institutions had launched AI initiatives, the 2025 findings suggest AI is now being mainstreamed − albeit with adoption weighted toward tactical use cases rather than strategic reinvention.

Notwithstanding enthusiasm for technology, a critical digital skills shortage persists. Such talent constraints are compounded by shifting risk priorities, the study notes.

“The 2025 barometer underscores cyber security as a top concern, with many institutions facing high exposure to digital threats as they expand online services and mobile channels. Regulators are responding with tighter oversight around cyber security frameworks, digital identity and anti‑money‑laundering compliance − further embedding technology within the governance agenda.”

Regulatory frameworks remain a central focus in the technology conversation, as Africa’s financial sector accelerates digital adoption.

“Across the ecosystem, many executives argue that existing policies have yet to catch up with innovation, creating tension between agility and compliance. The barometer highlights that 66% of respondents view current regulations as insufficient to fully support digital finance initiatives, particularly around AI deployment, cyber security, digital identity and cross-border payments.”

Executives also noted that regulatory uncertainty can slow investment in emerging technologies, prompting institutions to seek collaborations with fintech firms, telecoms and regulatory sandboxes to pilot solutions within safe frameworks. One respondent commented: “Innovation is moving faster than policy, which creates both opportunities and risks for financial institutions across Africa.”

Overall, the African Financial Industry Barometer 2025 depicts a sector at a technology inflection point: digital platforms and AI are driving performance optimisation, while cloud and data systems are reshaping product delivery, it states. The journey toward full digital maturity will require concurrent investments in talent, standards and governance frameworks that keep pace with innovation, it adds.

An industry executive reflected in the study’s commentary that the focus is no longer whether to digitise − but how to embed technology into the strategic core of Africa’s financial institutions.