Standard Bank Group reported that its technology expenditure in banking operations for the first six months ending June 30 amounted to R11.83 billion. This sum increased by only 2% compared to R11.62 billion the previous year, which corresponds to a 3% growth in constant currency.
During this period, the bank noted that nearly three-quarters of its employees are active users of generative artificial intelligence tools. This figure, presented in the interim results published on Thursday, covers the entire banking technology function, including software, cloud services, technology-related expenses, personnel, intangible asset amortization, as well as depreciation and other costs. These expenses account for about 28% of the bank's total operating expenses of R42.7 billion.
On an apples-to-apples basis, Standard Bank maintains its status as the largest technology consumer in the South African banking sector. The annual figure for 2025 was R23.5 billion, whereas Absa spent R16.7 billion on IT, including personnel costs, for the year ending December 2025.
Spending is growing due to AI implementation
However, the overall 2% growth underestimates the volume of the bank's purchases, as two accounting items dampened this trend. Intangible asset amortization, which is a non-cash write-off of previously capitalized software, fell by 26% to R835 million, and depreciation and other expenses decreased by 2% to R482 million. Together, these two items decreased by 19%.
If these items are excluded, the trend changes: spending on software, cloud services, and technology-related costs grew by 6% to R7.16 billion. The group attributed this to the growth in contract services, increased consumption of cloud resources, and ongoing investments in strategic technology programs. Technology personnel costs rose by 3% to R3.36 billion. In total, funds directed towards technology and personnel increased by 5%, reaching R10.52 billion.
Funding through reductions in other areas
An interesting point is that this 6% growth was absorbed another way. As of June 30, 72% of Standard Bank's employees were actively using generative AI tools, with 87 use cases approved. AI-driven recommendation capabilities supported over 10 million personalized customer interactions during the reporting period, and 78% of the group's migrated computing power is now in the cloud. In June, the bank took the lead in Africa and second place overall in the first Evident AI Index for banks in the Middle East and Africa region.
The group cited the expansion of AI capabilities as one factor driving up software and cloud service expenses, alongside specialized technology skills, core banking modernization, and cybersecurity. It was also noted that the growth is partially offset by optimization initiatives, including license rationalization, improved efficiency of cloud solutions, and infrastructure simplification. This view suggests that AI development may be financed through cuts in other parts of the structure, rather than new funds.
This aligns with Standard Bank's 'save for investment' approach adopted for the 2026 financial year. Under this approach, a slight decrease in the cost-to-income ratio is expected, while targeted strategic investments are funded. The banking sector's cost-to-income ratio improved to 49.3% from 49.5%.
Channel metrics complicate the usual automation story. In personal and private banking in South Africa, digital transaction volumes grew by 17%, reaching R1.7 billion, and login counts by 22%. Meanwhile, ATM transaction volumes fell by 22%, and branch volumes by 7%. Nevertheless, this same business added branches instead of closing them, ending the period with 516 branches compared to 491 the previous year, and points of presence grew from 640 to 686.
The group's total number of employees increased by 1% to 51,200, and the bank's employee count by 2% to 44,764. Two group metrics deserve attention: capital expenditures on property, equipment, and intangible assets decreased to R2.28 billion from R2.54 billion, and goodwill and other intangible assets decreased by 10% to R9.41 billion. Combined with the drop in amortization, this raises the question of whether Standard Bank is replenishing its capitalized software fund as quickly as it is writing it off, which is a question behind Absa's R2.4 billion software write-down announced in March.
Standard Bank reported gross income of R26.1 billion, a 10% increase, and return on equity of 19.8%.
