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Lenders overhaul core banking software as competition heightens



Lenders overhaul core banking software as competition heightens

Rising competition in the fast growing electronic banking segment of banking services, is pushing many lenders in the country to embark on an overhaul of their core banking software solutions, New Telegraph has learnt.



According to industry sources, the move, which is aimed at ensuring that the banks remain profitable has led to some banks either upgrading their core banking software to latest versions or acquiring more advanced and expensive core banking solutions.


Findings by this newspaper shows that the common core banking solutions used by Nigerian banks include, Flexcube, Finacle 10, T24 and Phoenix. A top official of one of Nigeria’s biggest banks, who did not want to be named, said that the financial institution had concluded plans to change its core banking solution for a more advanced variety developed in the United Kingdom.


He explained that the decision to change the core banking solution was due to the significant increase in the number of customers using the different electronic banking channels of banks in recent years.


He said: “Most banks are aggressively promoting digital banking and pushing their customers to electronic banking channels. However, as the number of customers using these channels is increasing, it is also putting a lot of pressure on IT infrastructure.


A core banking solution from India that appeared reliable a few years ago can suddenly start having issues and the bank will start suffering a lot of downtime.


This could result in a serious crisis for the bank given that so many customers these days use electronic banking channels.”



The bank official pointed that although the lender was spending a huge amount of money to acquire the core banking software from the UK, it was confident that the decision will pay off in the long run.


“Banking has gone digital so whether one likes it or not, in the years ahead banks will be forced to invest heavily in their IT infrastructure if they want to stay profitable,” he stated.


Commenting on the issue in a chat with our correspondent, a financial consultant, Mr. Jerome Agu, said: “Apart from the fact that they are very expensive, banks always have to be very careful when deciding on which core banking software to buy. This is because the slightest mistake can spell disaster.



In fact, there have been instances where after spending millions of dollars to acquire a core banking solution, some banks will discover after only a few days of trail that it is not as reliable as the one they had dropped. So the decision to change core banking software is always a very serious issue for banks.”


It would be recalled that First City Monument Bank (FCMB) Limited two years ago upgraded its service delivery platform with the deployment of Finacle Core Banking solution version 10.



In a statement, the Tier 2 lender said Finacle 10 would enable it to optimise its processes, enhance system reliability, performance, scalability and security, among others. It said the upgrade would also ensure that transactions at the bank’s branches and other touch points are now faster with rare occasions of service unavailability at its alternate channels, while offering more innovative products to customers.



Commenting on the upgrade,  the Group Managing Director/ Chief Executive of First City Monument Bank Group, then, Mr. Ladi Balogun, said: “We are conscious of the needs of our target market and the evolving dynamics of the society with an increasing technology savvy population. The new Finacle 10 solution provides us the flexibility required to create new pathways for enhanced offerings and service excellence using cutting edge technology.



“It has also placed us on a higher pedestal to sustain our rapid expansion drive and keep pace with market demands and trends”. Similarly, one of Nigeria’s big five lenders, Guaranty Trust Bank, about three years ago, successfully upgraded its core bank solution to the latest version of ICS BANKS from ICS Financial Systems, a global software and services provider for banks and financial institutions.


Commenting on the upgrade, Managing Director at ICFS, Mr. Robert Hazboun, stated: “ICSFS has always been committed to provide the bespoke state-of-the-art financial products and services. Our latest ICS BANKS application ensures delivering complete suite of banking business solutions, allowing GTBank to quickly put in use the features they need within minimal time, risk, effort and cost.


The immaculate upgrade that was achieved, best serves our reputation in providing professional services and high standards of support to our clients.”



Interestingly, in a chat with senior journalists last week, the Group Managing Director/ Chief Executive Officer, GTB, Mr. Segun Agbaje, said that the lender was targeting N205billion Profit Before Tax (PBT) in the 2018 financial year and that a significant portion of this would come from electronic banking, especially mobile banking. Pointing out that a lot of banking business is now moving to mobile phones, Agbaje said GTB raked in a total of N3.409billion from mobile banking in 2017, which was an improvement on the 2016 figure of N2.066.8billion, while the total volume of such transactions increased from 25.8 million in 2016 to 49.5miilion last year.


The GTB boss said the lender earned a total of N3.278.7billion from Internet banking in 2017 compared with N2, 042.8billion earned in the previous year. He further disclosed that the level of adoption of the bank’s digital banking continues to grow in volume and value, adding : “Active USSD customer base grew by 63per cent year-on-year from 1.9million in FY 2016 to 3.1 million unique customers in FY 2017.”

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