The true purpose Absa wrote off R2.4-billion in software program

Absa Group’s resolution to take a R2.4-billion software program impairment hit for the 12 months ended 31 December 2025 is just not solely due to AI – itself an accelerator of software program obsolescence – but additionally due broader technological tendencies and a strategic shift within the financial institution’s outlook on expertise.

In response to Absa Group CTIO Johnson Idesoh, rushing up Absa’s expertise modernisation drive is core to the choice as fast-changing buyer expectations drive the necessity for higher flexibility within the IT setting.

TechCentral reported earlier this month that Absa Group wrote off R2.4-billion in software program property after a revision of its total technique led to modifications in funding priorities and faster-than-expected expertise obsolescence.

The impairments had been greater than 13 instances the R179-million written off a 12 months earlier and had been unfold throughout the group. Head workplace, treasury and different operations took the most important hit (R1.1-billion), adopted by private and personal banking (R611-million), company and funding banking (R559-million), Africa areas (R63-million) and enterprise banking (R43-million).

“Whereas AI accelerates infrastructure and software program obsolescence, it is only one a part of the broader pattern of fast-paced technological modifications,” Idesoh has advised TechCentral.

“Previous paradigms for the lifetime of expertise have shifted and expertise cycles are accelerating as developments in platforms, cloud, information, cybersecurity and AI speed up.”

Basic shift

Absa and its friends within the banking sector have been engaged in multi-year IT modernisation efforts which have seen IT spend surge throughout the sector.

The oldest and largest of the banks are among the many greatest spenders, since extra their infrastructure was constructed on legacy platforms. Absa spent R16.7-billion on IT, together with workers prices, within the 12 months ended 31 December 2025 – and this prone to proceed to extend additional. “Absa is just not pulling again on expertise funding,” mentioned Idesoh.

Learn: Absa impairs R2.4-billion in software program after technique rethink

For banks, a lot of their modernisation efforts communicate to a shift away from the on-premises, mainframe architectures the banking sector was constructed on and in direction of cloud computing. That’s the reason the IT spend of newer banks, which had been constructed on cloud-native architectures from the beginning – banks corresponding to Capitec and GoTyme – is significantly decrease than their older rivals. Capitec, for instance, spent “simply” R2.6-billion on IT, excluding workers prices, within the 12 months ended 28 February 2025, in comparison with R14-billion at Commonplace Financial institution and R7.1-billion at Absa.

Synthetic intelligence is accelerating a push into the cloud within the banking sector – and throughout your entire financial system.

One purpose is that AI workloads are simpler to deal with in cloud environments.

The second is that hyperscalers corresponding to Amazon Internet Providers, Google Cloud and Microsoft Azure have made vital investments within the improvement of AI instruments and software program. Corporations would somewhat leverage these than waste money and time attempting to construct their very own.

In response to Idesoh, this impacts the pace at which enterprises can reply to modifications out there and deploy new options.

“To help our ongoing development, we interact specialised third-party suppliers that show management in particular technological domains. For instance, our just lately renewed partnership with AWS and Huawei permits us to leverage cloud options for improved digital service supply. We use a disciplined method to resolve whether or not to construct, purchase or accomplice, guaranteeing every resolution suits our technique and enterprise mannequin whereas shortly delivering worth,” Idesoh advised TechCentral.

The Absa CTIO mentioned this technique goals to refine the financial institution’s expertise property to prioritise scalable, safe and modern expertise, serving to place the financial institution “for higher worth and agility sooner or later”.

Obsolescence

Though Absa acknowledges that AI is contributing to a quicker fee of software program obsolescence within the banking business, its market-wide results are but to be totally realised.

Buyers have turn into involved that AI fashions, corresponding to Anthropic’s Claude, will eradicate the necessity for specialised enterprise software program. Corporations both ask AI to carry out the duties presently dealt with by vendor software program, or they immediate AI coding brokers from Anthropic, OpenAI or Google, to “vibe code” bespoke software program tailor-made to their wants.

Learn: Commonplace Financial institution IT invoice tops R14-billion as software program spending shifts

Companies will not want to purchase costly software program from conventional distributors corresponding to Salesforce, ServiceNow and Microsoft, or from the a whole lot of smaller, area of interest companies providing authorized tech, procurement techniques or monetary planning software program.

Though AI is a eager focus for Idesoh and the staff at Absa, issues associated to conventional IT property administration take precedence.

“Our method suits carefully with our expertise plan to simplify system structure, shortly shift to cloud-native platforms and section out outdated legacy techniques that not match our future objectives or maintain tempo with the fast-changing buyer expectations and expertise setting,” mentioned Idesoh.  – © 2026 NewsCentral Media