Ongoing investment in information and communication technologies (ICT) by financial service providers in South Africa is driving the transformation of the sector towards a more digitised service model, according to research from Frost & Sullivan.

South African financial services sector was among the largest consumers of ICT in 2014, spending $1.3 billion. The sector's ICT spend is expected to expand at a compound annual growth rate (CAGR) of 3.8% to reach $1.5 billion in 2019, reveals the report.

In a statement it was noted that growing demand in mobility and ubiquitous access to broadband connectivity has resulted in the adoption of omni-channel models in order to deliver efficient services and engage with customers.

"In order to have better visibility on their customers' needs, as well as overall operational risks, financial service providers are looking to leverage technology," said Frost & Sullivan ICT industry analyst Lehlohonolo Mokenela.

"This allows them to offer more personalised services for an increasingly demanding and technology-savvy customer base," he added.

Financial institutions in South Africa are facing unprecedented levels of competition and rising costs to maintain their brick-and-mortar operations. They are, therefore, turning to emerging technologies and new service models in order to grow revenues, while keeping operations lean.

Despite increasing technology integration within the industry, concerns around the security of solutions, such as the cloud and bring-your-own-device (BYOD), are limiting the pace of technology uptake. As a result, financial institutions in South Africa largely favour private cloud models over the public cloud, in spite of the latter's cost advantage, reads the statement.

"Key industry players will be keen to build their services and operations around technology in order to improve customer value. However, they are still taking a more gradual approach, undoubtedly wary of the reputational costs of security breaches," explained Mokenela.

"However, advances in security in the long-term, will likely ease the concerns of CIOs," he stated.

It is critical that ICT service providers develop a deeper understanding of the underlying industry-specific trends and how solutions, such as big data and mobility, can be used to leverage them. This will enable them to provide relevant solutions for financial service companies, which in turn allows them to improve service delivery and minimise their costs.