What a downgrade will mean for S.A's banks

South Africa still faces a possibility of a potential sovereign rating downgrade, having escaped two rating decisions from two ratings agencies just last year. The threat of a downgrade looms over the South African banking sector, raising concerns about the potential implications for local banks. CNBC Africa's Garaborek La Chia caught up with Chief Executive Officer of MedBank, Mike Brown, to discuss these elements as well as other issues that were raised at the recent World Economic Forum. The Davos 2017 forum showcased a much more positive outlook than previous years, especially from a business perspective. The economic impact that President Trump may have on areas like US GDP growth rates and its repercussion on the world economy seems to have instilled optimism among attendees. In South Africa, this positive outlook is reflected in the strengthening Rand and lowered interest rates, indicating brighter economic prospects. There has been a noticeable shift in focus at Davos from banking reform to growth, highlighting the changing global economic landscape. The US President has been viewed favorably for banks, with stock prices surging post-election, indicating potentially higher profits. Despite concerns about excessive regulation, South Africa has maintained a pragmatic approach to banking oversight, ensuring both safety and economic growth. The role of banks in the political economy cannot be overlooked, and in South Africa's case, ongoing court cases involving banking relationships with the Finance Minister highlight the close interplay between banking and politics. The looming possibility of a ratings downgrade for South Africa calls for a shift in mindset from evasion to seizing the benefits of a potential upgrade, which could lead to lower interest rates and inflation, benefiting the public. By the time the rating agencies revisit in June, South Africa aims to present a more positive economic narrative, showcasing improved growth rates and policy implementation. Political stability is key for businesses like banks, as uncertainty hampers confidence, investment, and growth. In a landscape of technological disruption and innovation, NetBank sees immense potential in leveraging technology to enhance customer service and operational efficiency. Technologies like digital, big data, and blockchain present significant opportunities for banks to offer superior products and services profitably. The outlook for NetBank and the banking sector in general appears promising amid the evolving technological landscape.