South Africa kisses cash goodbye

South African banks are closing down branches and ATMs across the country, but experts warn that the shift to digital-first banking risks excluding 3.9 million unbanked adults.

Business Development and Partnerships Manager at the University of Cape Town’s Hasso Plattner d-school Afrika, Ettienne Mostert, said South Africa’s unbanked are facing a digital divide.

“South Africa’s major banks are closing physical branches and ATMs at an unprecedented rate,” Mostert said. “Standard Bank, for example, has reduced its branch footprint by 42% since 2017.”

Absa, FNB, and Nedbank have also made moves to scale back operations as the industry moves towards digital-first banking.

Interestingly, though, Absa, Standard Bank, and FirstRand (FNB) have all increased their number of bank branches over the last year, albeit marginally.

However, as digital banking continues to gain prominence, banks are rethinking their branch models. Newer branches are typically smaller with fewer employees and offer a reduced number of services.

While digital banking is becoming more widespread, there are still many South Africans who operate outside of the system.

Mostert said that for these 3.9 million unbanked South Africans, the digital transformation raises the question of how they will access financial services in a world increasingly dominated by apps and online platforms.

According to the World Bank’s latest Global Findex report, 80 million adults in Sub-Saharan Africa have the prerequisites to join a bank.

This includes mobile phones, personal IDs, and SIM cards, but they remain unbanked. “The challenge isn’t technology,” Mostert said.

“These individuals are not rejecting apps or digital banking. They are hesitant to trust financial institutions, find the products irrelevant, or face barriers to physically accessing banks.”

He explained that trust is one of the critical barriers for the unbanked. Fear of fraud, opaque fees, and uncertainty about whether the system works for them keep people on the sidelines.

“Without trust, no digital platform or mobile app can succeed. Accessibility, relevance, and transparency must come first,” Mostert said.

Changing the system

To change the system, Mostert explained that banks need to understand users’ needs. This entails a collaborative approach that puts users at the heart of product development.

Understanding the lived realities of potential users and co-creating solutions with communities rather than imposing them from the boardroom is key.

“Banks and fintechs must start by listening before building. This involves engaging with unbanked communities to understand their financial habits, pain points, and aspirations,” Mostert said.

“Piloting small, iterative solutions with real users allows institutions to learn and adapt quickly, reducing the risk of failed launches. It also sends a signal that the bank is responsive and accountable, which is essential for building trust.”

Mostert stressed the importance of collaboration when designing digital banking solutions. Growing trust at a large scale requires credible institutions, regulators, NGOs, and financial service providers to work together.

“Success stories from early pilots must be communicated widely, demonstrating that systems work and that people’s money is safe,” he said.

Mostert noted that transparency, clear communication, and visible safeguards help move people from scepticism to confidence.

“Once trust is established and users join banks, digital platforms become a powerful tool. Apps, online banking, and mobile money can expand convenience, reach, and functionality,” he said.

“But these tools only add value after adoption, not before. Building solutions without first earning trust risks creating technology that exists but goes unused.”

World Bank data shows that the building blocks for financial inclusion are in place. However, they will only translate into meaningful adoption if institutions tackle the relational and social dimensions of banking.

According to Mostert, human-centred, co-created solutions can address multiple barriers, such as trust, relevance, and accessibility, and pave the way for effective and inclusive digital adoption.

“Africa’s unbanked population represents not just an economic opportunity, but a chance to rethink financial systems from the ground up,” he said.

“Banks, fintechs, and policymakers must ask whether they are building services that people trust and need, or technology that merely exists. The answer will determine the success of Africa’s next wave of digital finance.”