African banks are entering a decisive phase in their digital transformation journeys, with Artificial Intelligence (AI) and cybersecurity emerging as twin pillars of innovation and resilience. That's the central message of a new landmark report published by Backbase, the AI-powered banking leader, in partnership with African Banker magazine.
The third edition of the Africa Digital Banking Experience Series 2025, titled Next-gen Banking Innovations: AI, Cybersecurity & Segment-based Banking, draws on insights from 203 senior banking executives across 40 African countries. It reveals a strong consensus among industry leaders that AI will be critical to achieving hyper-personalisation, driving growth, and managing escalating risks in the years ahead.
AI adoption gains momentumAccording to the survey, 85.4% of respondents consider AI and AI-driven services "very or extremely important" for improving operational efficiency and customer engagement over the next five years. The most common applications are in customer service, with 64.8% of banks deploying virtual assistants and chatbots. Fraud detection (47.7%) and enhanced credit scoring and lending (45.3%) also rank among the top use cases.
Yet challenges remain. Banks cite integration with legacy systems (58.6%), high upfront costs, shortages of skilled personnel, and concerns over data privacy and regulatory compliance as barriers to scaling AI solutions.
Cybersecurity pressures intensifyThe report underscores the growing threat landscape. A striking 81.5% of banks reported experiencing a cyberattack in the past year, with phishing schemes and social engineering attacks, often powered by AI, among the most common.
Institutions are bolstering their defences in response to these cyber threats: 79.7% have adopted enhanced cybersecurity measures, 67.2% have increased investment in infrastructure, while 60.9% have implemented real-time fraud detection systems.
Segment-based banking: Beyond mass marketBeyond technology, banks are rethinking customer engagement strategies. The report highlights a shift away from one-size-fits-all approaches toward more individualized, meaningful experiences. This evolution reflects the diverse needs of Africa's customer base, which spans sophisticated mobile-first users and first-time digital adopters.
Regional differences are also emerging. East Africa is leading in AI integration, while North Africa is prioritizing big data for enhanced security. But the challenge of merging innovation with integrity is shared across the continent.
Expert perspectiveHeidi Custers, Global Strategy & Transformation Director at Backbase, summed up the findings:
"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."
Looking aheadThe findings of the report are significant in appraising Africa's banking sector at a turning point, where the convergence of AI, cybersecurity, and customer-centric strategies are poised to define the industry's trajectory. As banks balance innovation with trust, the next five years may prove pivotal in shaping a digital-first financial ecosystem across the continent.
The full report can be accessed here: Backbase Insights.