09 Dec African banks turn to AI and increase cybersecurity

African banks are reaching a critical stage in their digital transformation, with Artificial Intelligence and cybersecurity now viewed as essential to the sector’s future.

A new report from Backbase shows that AI-driven innovation and stronger cyber defences are becoming central priorities across the continent.

The third edition of the Africa Digital Banking Experience Series 2025 is based on responses from 203 senior banking executives in 40 countries. It found broad agreement that AI will be key to enabling hyper-personalised services, supporting growth and managing rising risks.

According to the survey, 85.4 per cent of respondents regard AI as ‘very or extremely important’ for improving efficiency and customer engagement over the next five years. The most widespread uses include virtual assistants and chatbots, deployed by 64.8 per cent of banks, followed by fraud detection systems and enhanced credit scoring.

However, banks also cited several obstacles to expanding AI capabilities, including ageing core systems, high investment costs, shortages of specialist skills and concerns around data protection and regulatory compliance.

Cybersecurity concerns continue to intensify. The report found that 81.5 per cent of banks had faced a cyberattack in the previous year, with phishing and social engineering attempts – often supported by AI tools – among the most common. In response, nearly 80 per cent of institutions have strengthened cybersecurity measures, with many increasing infrastructure spending or adopting real-time fraud detection.

The report notes a shift from broad, mass-market strategies to more tailored segment-based banking, reflecting the varied needs of Africa’s diverse customer groups, from digitally experienced users to first-time adopters. East Africa is currently ahead in AI integration, while North African banks are giving greater attention to big-data-driven security.

Heidi Custers, Global Strategy & Transformation Director at Backbase, said: “The most forward-thinking African banks are realising that growth and security are no longer separate strategies, they are two sides of the same digital coin. AI-driven engagement builds relationships; AI-driven security protects them. Segment-based banking ensures those experiences remain human, relevant, and inclusive.”