The Financial Sector Conduct Authority and the Prudential Authority have published their inaugural report, Artificial Intelligence in the South African Financial Sector, providing a first comprehensive overview of how South African financial institutions are adopting artificial intelligence, including machine learning and generative AI. Drawing on a 2024 survey of banks, insurers and investment managers and on global developments, the report finds AI usage increasing and sets out governance, transparency and consumer-protection considerations for responsible deployment. Banks are the most advanced adopters, with 52% actively using AI, followed by payment providers at 50%. While most surveyed institutions planned AI investments of under ZAR 1 million, more than half of bank respondents anticipated investing over ZAR 20 million in AI technologies during 2024. The report highlights opportunities in data analytics, operational efficiency and cybersecurity, alongside risks including data privacy concerns, bias and discrimination, reputational damage and systemic vulnerabilities, with broader adoption constrained by regulatory uncertainty, skills shortages and challenges around explainability and governance. It encourages institutions to use recognised explainability methods such as SHAP and LIME, strengthen governance structures including data governance, model risk management and board-level oversight, and improve disclosure when AI is used in consumer-impacting decisions such as credit assessments or insurance pricing. The authorities indicate they would like to collaborate with the Information Regulator to align approaches with the Protection of Personal Information Act 4 of 2013, and they envisage developing sector-wide guidance for ethical, fair and responsible AI alongside enhanced oversight to mitigate bias, inaccuracies and consumer harm.

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