Digital Transformation in South Africa

In this chapter, we discuss the overarching concept of digital transformation. We make an argument that literature on digital transformation is dominated by scholars in the developed world. Literature is scarce on the views and case studies in the developing world. This book is an attempt to look at digital transformation from the lenses of scholars in the developing world.

The book consists of twelve chapters covering digital transformation in enterprise risk management (ERM), the role of digital transformation in driving financial inclusion and accessibility and the challenges limiting the adoption of digital transformation by banks and other financial institutions, the current state of digital transformation, the challenges that are faced, the existing digital gaps and digital literacy, and the potential benefits associated with the use of digital technology in rural areas, and digital transformation and process improvement in the general finance environment.

It further covers the effects of digital transformation on reputation management, the concept of digital transformation in the marketing environment, the adoption of digital technologies in the auditing environment through the lenses of Technology Task Fit Theory, the role of technologies in digitalizing corporate reporting through a consistent and efficient configuring and restructuring of the most informative quantitative and qualitative data from the source to the end users of corporate reports, digital transformation by tax authorities and the impact of digital transformation on small businesses and offers insights into best practices for its implementation.

This chapter discusses digital transformation in enterprise risk management (ERM). ERM is a strategic business discipline that helps organisations achieve their goals by addressing all of their risks and managing the combined impact of those risks in an integrated manner. This approach offers several benefits to an organisation, compared to the traditional risk management system, as it offers a holistic approach to managing risk. Despite the importance of ERM, organisations are seeking innovative ways to improve their efficiency and effectiveness. The shift to Industry 4.0 suggests the need to integrate digital technologies into the ERM system. Digital transformation also offers risk managers a window into the array of risks facing organisations.

As a result, this chapter conceptualises the need to digitalise ERM. We further outline the role of digital transformation in the ERM process. The study points out that digitalisation provides a more holistic perspective of the risks identified, their characteristics, causes and interdependencies. It enables companies to overcome risk oversight issues, make judgments and efficiently handle challenging risk situations. Hence, risk managers should leverage these digital tools, such as machine learning, big data, ERM software and AI-powered models, to identify and understand risks previously thought to be unknown. It is crucial for organisations that desire effective ERM programs to make sure that the risk management function and IT function collaborate to improve or develop ERM support systems. Therefore, ERM program executives should keep working with important stakeholders and other important functional areas to find ongoing investments, support, and resources to promote the use of digital tools for ERM throughout an organisation.

This chapter discussed the effect of digital transformation in the banking and financial sector. This chapter examined the overview of banks and the financial sector and the role of COVID-19 in increasing the pace and adoption of digital transformation by banks and other financial institutions. Also, the chapter examined the important role digital transformation plays in the banking and financial sector and how digital transformation is reshaping the banks and financial sector. Emphasis was given to the key technologies driving digital transformation in the banking and financial sector and the key dimensions of banks’ digital transformation. The chapter also discussed the role of digital transformation in driving financial inclusion and accessibility. The chapter equally discussed the challenges limiting the adoption of digital transformation by banks and other financial institutions and the future trends and prospects for banks and financial institutions as they embrace digital transformation. The final lap of the chapter is the summary of the key findings from the chapter.

Like every other financial institution, banks seek to maximise their profits by reducing operational expenses or reaching out to more customers. Hence, the need to embrace the disruptive tendencies of digital transformation that are changing the organisational landscape and how businesses and individuals conduct their daily activities. The Covid-19 outbreak caused a significant shift in how banks and other financial institutions operate. More internet-based services than ever are available in the banking sector. Digital services are now more crucial than ever, even though traditional banking services still entail going to a banking hall or the offices of any financial organisation. Transactions made during and after Covid-19 surpassed those made before the outbreak. The banking and finance industry is undergoing a complicated and continuing digital transformation process. The diverse effects of digital technology on the sector have been examined in this chapter, from improving customer experiences and operational efficiencies to addressing legal issues and cybersecurity risks. Financial institutions must innovate and adapt as technology develops in order to be competitive in this quickly changing environment. Those who embrace this shift will be best positioned for success in the future. There is little doubt that the future of banking and finance lies in digital technology.

The concept of digital transformation has garnered considerable attention across many industries, including traditional authorities in South Africa. The objective of this chapter is to improve an understanding of digital transformation within domains governed by traditional authorities in South Africa through a review of relevant literature. Through literature review, this chapter investigates the current state of digital transformation, the challenges that are faced, the existing digital gaps and digital literacy, and the potential benefits associated with the use of digital technology in rural areas. Traditional authorities in South Africa are only beginning to embrace digital transformation; there are numerous obstacles to be addressed. However, by addressing issues such as limited digital infrastructure, lack of digital skills, and resistance to change, traditional authorities can unlock the potential benefits of digital transformation. Improved service delivery, increased efficiency, enhanced transparency, and better decision-making are some of the advantages that can be derived from embracing digital technologies. Further research and collaboration between traditional authorities, government agencies, and other stakeholders is needed to drive digital transformation in this sector and ensure its successful implementation.

The finance function is one of the most affected fields of work by digitalization. This is a common feature in all companies, sectors, or various country applications. From this point of view, the basic rule of transformation in financial operations is the strategic importance of digitalization which is creating opportunities. However, this transformation process should be supported by good governance. In this study, the new approaches that take place with digitalization in the financial environment will be discussed and compliance policies will be proposed according to the corporate governance principles, theoretical framework, and international standards based on relevant literature. Due to the digitalization of financial tools and techniques, the fields of change needed in the understanding of corporate management will be put forward. Thus, this work contributed to companies, sectors, and different country applications. In this context, to contribute to the literature and make value-added work, the digital transformation index, corporate governance index, and digital maturity model indicators were used to reveal the interactions and connectedness between finance and corporate governance. Policy recommendations will be made based on new digital business models and good governance perspectives.

This chapter described the development of corporate reputation into e-reputation against the background of a global digital transformation as part of the Fourth Industrial Revolution, based on the theories of legitimacy and signalling. The importance of corporate reputation in the long-term sustainability and success of organisations was illustrated, and the effects of digital transformation on reputation management were highlighted. The chapter proposed that organisations should be more proactive in managing their e-reputation in a digitally transformed environment. Specifically, it was proposed that e-reputation be perceived in three important new ways, namely what forms e-reputation, how it is formed, and who forms e-reputation. Firstly, in the digital age, it was proposed that corporate reputation is becoming increasingly impersonal. This is a significant trend that implies that practitioners and researchers should realise that the reputational landscape is a multifaceted field with various potential challenges. Secondly, how e-reputation is formed must be perceived in a new way that moves from the traditional paradigm of reputation development, which relies on perceptions of past and expected future interactions between organisations and their stakeholders, to the inclusion of digitally transformed systems. For practitioners and researchers to be able to manage and understand corporate reputation, they must redefine the dimensions, components, and items of corporate reputation within a unique digitally transformed organisational context. Finally, a shift in who forms an e-reputation was also proposed, to include other entities. Stakeholders and organisations, as well as corporate reputation practitioners and researchers, rely on a digitally transformed system of designers, information providers, and data holders who underpin digital interactions and information from which reputations are formed.

Digital technologies are shaping the industrial revolution, extending beyond industry and influencing markets and customer experiences. Their transformative power is noticeable, particularly in the field of marketing. In this chapter, we discuss the concept of digital transformation in the marketing environment. Digital transformation in the marketing environment includes the incorporation of technological advancements across all dimensions of marketing tactics, aiming to foster growth while retaining relevance within a constantly changing digital landscape. Digital transformation has had a significant impact on the marketing landscape, particularly digital marketing. It has driven changes in marketing practices and markets, necessitating a deep understanding of the consumer value chain and adaptation to evolving business practices. The integration of marketing and sales departments has been affected, leading to changes in organizational performance. Digital transformation has also improved the interaction between firms and customers, emphasizing the importance of integrated communication. However, the digital transformation of marketing is not without its challenges, including barriers to change and a skills gap. Nonetheless, digital marketing has become critical for firms to remain competitive and respond to changing market landscape. As emerging economies advance technologically, the digital landscape confronts marketers with both challenges and possibilities. This chapter aims to identify the challenges and opportunities of incorporating digital transformation into marketing activities, by examining existing knowledge and real-world examples that evaluate the adoption and use of digital technology for marketing in selected emerging economies. Leveraging technological capabilities is critical for organisations to compete and thrive in both domestic and international markets. However, emerging economies, particularly in Africa have reported low rates of technological adoption, limiting their ability to compete and grow. As a result, emerging economies are confronted with a rapidly evolving digital transformation process that has a profound impact on marketing practices. Organisations can position themselves advantageously in emerging economies through effective digital transformation by understanding the discussed strategies, challenges, and opportunities. This chapter proposes to contribute towards the existing knowledge on the adopting digital technology, specifically within the marketing environment towards building sustainable and better emerging economies.

The finance and banking sector must embrace digital transformation more now than ever, to stay competitive. Implementation of digital transformation initiatives and strategies could unlock costs and processes efficiencies and ensure sustainable growth, and improved service delivery which ensures improved customer experiences. In this chapter, we discuss digital transformation in finance and banking with a specific focus on servicing customers’ changing behaviors, the use of big data and analytics to make informed decisions as well as operational efficiencies required when customer-centric models are adopted.

Finance and banking institutions need to adjust their strategy to take into account the changing requirements and behaviors of their customers as the financial landscape changes along with technological improvements. The backbone of this evolution is digital transformation, which is supported by big data analytics and operational efficacy. A shift towards customer-centric models, supported by data-driven insights and operational efficiencies, is essential for financial institutions to thrive in this digital era. In the drive to meet and surpass customer expectations, those who can successfully combine the human factor with the technology component will emerge as frontrunners.

Digital transformation (DT) is contemporary and has been a buzzword in recent years. The concept has gripped most economic sectors and regulatory bodies including the International Auditing and Assurance Standards Board (IAASB) to the extent that the board had to call for a research study to examine digital transformation in the external audit space. The purpose of the study was to inform the initiatives of setting standards to guide the employment of technology in audit engagements. One of the things that DT has done in auditing is to change the nature of the data that auditors work with. This stemmed from the soaring digitalisation of business processes. Among other things, auditors found themselves having to work with larger volumes of data than they did before digitalisation. This had a ripple effect on the auditing procedures. The auditing space is highly regulated hence the outset of digital transformation had a destructive effect on the traditional way of doing things in this space. The digital transformation had implications for the regulation of auditing and meant that the existing International Standards on Auditing (ISA) had to be revisited and reviewed. Against this backdrop, this chapter sought to examine the adoption of digital technologies in the auditing environment through the lenses of Technology Task Fit Theory (TTF). The chapter will give a brief background and a definition of digital transformation before describing the audit process. Furthermore, the chapter will describe the factors that affect the adoption of digital transformation in auditing engagements. It will also examine the adoption of digital technologies in the auditing space as well as how auditing has been transformed by digital technologies including implications of DT on International Standards on Auditing (ISA). The chapter ends with a focus on the benefits and challenges of employing digital transformation in auditing.

In today’s world where ‘change’ is arguably the new ‘constant’, accounting professionals are expected to ‘reimagine and redefine’ the future of the profession and the work they do to make them ready for the digital transformation enabled by the Fourth Industrial Revolution. The impact of digital transformation across businesses is being felt in an unprecedented manner and this is very significant and distinctive in both the latitude and rapidity of transformation in business and information ecosystems. Therefore, it is logical to state that accounting and corporate reporting are key functions that must align with the digital transformation age. Accounting professionals who understand the critical data in the internal and external reports will be in a better position to take greater advantage of digital transformation.

Corporate reporting is the concept that connects an organisation to its internal and external stakeholders. It includes financial performance reporting; social responsibility reporting; corporate governance reporting; risk management and governance reporting, sustainability reporting, audit and assurance reporting, and other forms of reporting, which are generally, classified as mandatory and voluntary disclosures. Thus, corporate reporting aims at communicating the value created by a business organisation as well as its impact on the people, society, and the environment in which the business organisation operates. This chapter explores the role of technologies in digitalizing corporate reporting through a consistent and efficient configuring and restructuring of the most informative quantitative and qualitative data from the source to the end users of corporate reports.

Revenue authorities around the world are digitally transforming their engagements and interactions with taxpayers and other stakeholders. These tax authorities are now remodeling their tax administration functions, technologically enabling the filing of tax returns and reporting requirements, as well as digitalising their auditing functions and procedures. The exponential growth of the digital economy and the challenges posed by the intangible and elusive nature of digital activities have all made the need for digital transformation indisputably critical. The importance of digital transformation of tax administration cannot be overemphasised for developing countries’ revenue authorities because the enhancement of domestic revenue mobilisation and increasing tax compliance is crucial for these nations to fund public expenditure. Tax revenue constitutes a large share of the total national revenue of most developing and emerging economies. Digital transformation by its nature, speaks to technologically transforming processes and operations. Accordingly, for tax administration, it signals the need to embrace digital tools in delivering tax administration functions of assessing tax liability, communicating with taxpayers and other revenue authorities as well as facilitating tax compliance. Therefore, this has implications for tax administration responsibilities and functions, the resources required for digitising and digitalising the functions, change management, and the requisite digital skills of tax administrators. Through an integrative literature review, this chapter sought to give an insight into digital transformation in taxation in developing countries by explicating the opportunities, barriers, and possible externalities of digitally transforming tax administration. The review established that digital transformation plays a fundamental role in tax administration and tax compliance. It can help tax authorities to reduce administrative and compliance costs, enhance tax revenue mobilisation, minimise corruption, increases the efficiency of processes as well as improve transparency in service provision to taxpayers. Digital technologies can also be exploited for risk identification, management, and mitigation. The challenges include complexity, technological biases, poor digital infrastructure, the digital divide, digital and financial illiteracy as well as system failures among other constraints.

This research chapter investigates the impact of digital transformation on small businesses and offers insights into best practices for its implementation. Using a mixed-method approach, the study explores the current state of digital transformation adoption, its driving factors, barriers, and methods for evaluating success among small businesses. The findings aim to provide valuable guidance for small business owners and policymakers seeking to enhance their digital transformation strategies.