Social Capital, AI, and the Future of Finance

In a recent speech, Unathi Kamlana, Commissioner of South Africa’s Financial Sector Conduct Authority (FSCA), examined the forces that are likely to shape the future of the financial sector, including innovation, trust, governance, culture, and social capital.

Kamlana was clear that the FSCA supports innovation, noting that a joint study with the Prudential Authority confirms AI is already being widely adopted across the sector. But he warned that “technology does not remove responsibility from institutions; if anything, it increases it.” As decisions become increasingly algorithm-driven, he stressed, governance, accountability, and fairness must remain central.

Kamlana outlined the FSCA’s increasingly outcomes-based approach, anchored in the forthcoming Conduct of Financial Institutions (COFI) framework. He urged institutions not to wait for the legislation to arrive, arguing that the shift in mindset it represents, away from narrow compliance and toward genuine accountability for customer outcomes, should inform how institutions think about conduct now. "Institutions that place customer outcomes at the centre of how they design and deliver financial services will be better positioned to maintain trust and support the long-term sustainability of the financial system," he said.

“Integrity and trust in the financial sector are ultimately shaped by how institutions are governed and the culture that exists within them,” Kamlana said. That trust, he argued, is the basis for the social capital the financial sector depends on to operate. “Financial capital is visible on balance sheets,” he said. “[Social capital] is built over time through responsible leadership, ethical conduct and the consistent delivery of fair outcomes for customers, but it can be lost very quickly when misconduct occurs.”

This is why sound governance and culture are so essential, he added. “The standards institutions set internally, the behaviours they encourage, the incentives they create, and the accountability leadership enforces, determine whether that social capital is strengthened or eroded,” Kamlana said. “While regulators can establish frameworks and take enforcement action where necessary, the day to day conduct of the financial sector is determined by the choices and behaviours of those who operate within it.”

He concluded by emphasizing that the future of the financial sector would not be determined by either regulators or industry alone. “It will depend on how effectively we work together to navigate these changes and build a financial system that remains resilient, innovative and trusted,” he said.