Banking Sector Transformation: Disruptions, Challenges and Opportunities

William Gaviyau () and Jethro Godi ()
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William Gaviyau: Department of Finance Risk Management and Banking, University of South Africa (UNISA), Pretoria 003, South Africa
Jethro Godi: Department of Finance Risk Management and Banking, University of South Africa (UNISA), Pretoria 003, South Africa

FinTech, 2025, vol. 4, issue 3, 1-27

Abstract: Banking has evolved from ancient times of using grain banks and temple lending to modern banking practices. The transformation of the banking sector has ensured that banks play the crucial role of facilitating faster and efficient service delivery. This paper traced the evolution of banking and examined associated disruptions, opportunities, and challenges. With the specific objective of influencing policy-oriented discussions on the future of banking, this study adopted a literature review methodology of integrating various sources, such as scholarly journals, policy reports, and institutional publications. Public interest theory and disruptive innovation theory underpinned this study. Findings revealed that banking has evolved from Banking 1.0 to Banking 5.0 due to disruptive factors which have been pivotal to the significant structural sector changes: Banking 1.0 (pre-1960s); Banking 2.0 (1960s to 1980s); Banking 3.0 (1980s–2000s); Banking 4.0 (2000s–2020s); and Banking 5.0 (2020s to the future). Despite the existence of opportunities in the transformation, challenges include regulations, skills shortages, legacy systems, and cybersecurity that must be addressed. This calls for a coordinated response from stakeholders, with banking’s future requiring collaborations as cashless economies, digital economies, and digital currencies take centre stage.

Keywords: banking evolution; fintech; digital banking; banking sector transformation; artificial intelligence; regulatory framework; cybersecurity; customer experience (search for similar items in EconPapers)
JEL-codes: C6 F3 G O3 (search for similar items in EconPapers)
Date: 2025
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