Disruption of traditional South African retail banks by modern digital technologies

Abstract

This research examined how traditional South African retail banks, such as ‘Bank X’, strategically responded to counter or avoid emerging threats posed by digital disruption, particularly regarding the entry of new market players like Tyme Bank, Discovery Bank, and Bank Zero. New entrants were employing newer generation technologies such as AI, blockchain, and big data to offer affordable, agile banking services at prices that are difficult for legacy-stripped incumbents to maintain. Guided by Disruptive Innovation Theory, RBV, and Organisational Ambidexterity, the study examined two research questions: 1. What strategies have traditional retail banks adopted to improve their competitiveness in an industry vulnerable to digital disruption? 2. To what extent does adopting modern digital technologies enhance competitiveness, increase customer loyalty, and improve the performance of traditional retail banks in the South African retail banking sector? Through qualitative thematic data analysis of executive interviews, the study established that Bank X had undertaken digital transformation via platform-based strategies, customer-focused design, and innovation-driven capital allocation. However, this was constrained by legacy technology, regulatory lag, and fragmented data infrastructures. Although digital technology had enhanced working effectiveness and behavioural segmentation, its transformational impact was incomplete due to uneven adoption and cultural lag. The study concluded that sustained competitiveness depended on reconfiguring internal resources, institutionalising rapid innovation, and ensuring that organisational culture aligns with a digital-first strategic mindset. The recommendations suggested updating fundamental systems, investing in data capabilities, enhancing regulatory collaboration, and transitioning to platform business models. Future research should employ comparative and longitudinal approaches to assess digital maturity in banks, as well as analyse the intersection of digital transformation with financial inclusion and organisational transformation.