Mfundo Nkuhlu on why the Financial Sector Transformation Council (FSTC) remains central to inclusive growth, economic participation and transformation that works in the real economy.
South Africa’s financial sector has spent more than 20 years measuring transformation. This has created a credible body of evidence that allows the sector to see where progress has been made, where momentum has slowed and where deeper structural gaps continue to limit the promise of broad-based economic participation.
The mandate of the Financial Sector Transformation Council (FSTC) is to shape, influence and measure transformation in the financial sector and to promote the Financial Sector Code as an enabler of a sustainable, inclusive and growing economy. It remains relevant at this time even as the focus shifts beyond regulatory compliance to impactful outcomes in the real economy.
The first phase of financial sector transformation established common measures, reporting obligations and a shared framework. The next phase connects those measures more directly to meaningful and impactful economic outcomes. The deeper question is what has changed in the real lives of people.
South Africa’s operating environment is constrained by historical and structural fault lines of inequality. Growth remains below the level needed to shift unemployment, poverty and inequality at scale. Household incomes are under pressure. Businesses are managing rising costs, infrastructure constraints and uneven demand. In these conditions, financial institutions are having to balance competing objectives of inclusion, operational soundness, capital allocation, risk and long-term sustainability.
Transformation requires a growing economy in as much as growth fuels faster structural change. The real task is to bring growth and transformation into the same frame. Transformation must broaden the productive base of the economy. It must help build more capable enterprises, deepen financial inclusion, expand skills, support access to capital and strengthen participation in the financial system. It must create a wider base of people and businesses able to contribute to growth. This is why measurement must evolve. It must continue to track compliance and increasingly help the sector understand impact. The most important shift now is from reported progress to measurable impact and value creation.
Financial services is experiencing rapid changes driven by technological innovations, digital processing, advanced data analytics and the use of Artificial Intelligence (AI) and robotic agents. This is dramatically changing client experience, increasing the speed and scale of processing capability and transforming business models.
Access to financial services is no longer defined by a network of branches and physical service points. Increasingly, access is shaped by digital connectivity, data platforms, devices and digital literacy. Digital channels and the use of Artificial Intelligence (AI) are creating major opportunities for growth, reducing costs, extending reach and allowing institutions to serve clients, both consumers and businesses, in ways not possible hitherto. AI and data-driven decision-making is leading to improved risk assessment, fraud detection and client experience.
Yet, these new capabilities can reinforce patterns of exclusion and reproduce social inequality. For this reason, transformation must also include the digital financial architecture and the entire ecosystem of delivery of financial products and services.
The financing of small and medium enterprises is an important intersection of growth and transformation. SMEs create jobs. They support local economies. They build household income. They expand the tax base and help create new markets for financial institutions. In short, they provide the clearest route to broad-based participation and inclusive outcomes in the economy.
A pronounced aspect of transformation in the South African context is diversity and representativity. Representation matters because decision-making matters. The financial sector allocates capital, prices risk, designs products and solutions, manages assets and liquidity and therefore influences the direction of the economy. Transformation must therefore be visible where such decisions are made. This requires sustained investment in developing the talent pool and bench strength to feed into the managerial and executive leadership levels. A new and urgent dimension of upskilling and reskilling is to invest in AI fluency and capabilities, cognisant that the workforce of the future will comprise of humans and AI agents.
As a multi-stakeholder body, the FSTC brings together voices from its constituencies which include the Trade Associations in financial services, Government, Nedlac Organised Labour (Labour), Nedlac Organised Community (Community) and the Association of Black Securities and Investment Professionals (ABSIP), in a negotiating-cum-collaboration setting to forge agreements on transformation in the financial sector.
My responsibility as its Chairperson is to ensure that the FSTC is soundly governed, effective in its programmes and future-focused to contend with the speed and scale of technological innovations, business transformation and regulatory changes in financial services. I am committed to creating an FSTC that is more deliberate about its purpose, credible, stronger and future-focused.
That means strengthening governance so that decision-making is clear and streamlined, delivering on key priority matters such as the review of the Amended Financial Sector Code (FSC) and deepening stakeholder engagement and reliable participation. The goal is to ensure that transformation remains measurable, relevant to the modernisation agenda in financial services and impactful in improving the quality of lives of people.
South Africa needs a financial sector that is stable, competitive, innovative and inclusive. The opportunity now is to build alignment between growth and transformation.
South Africa’s operating environment is constrained by historical and structural fault lines of inequality