Tanzania’s third largest bank is now a fully flegded universal retail bank, thanks to a core banking system developed by International Business Machines (IBM).
For the National Microfinance Bank, the move was a calculated one, aimed at earning a larger share of the growing Tanzanian retail banking space, as the government prepared to off-load 70 per cent of its share-holding to private investors.
“We had to completely transform our banking systems to offer new services, cut customer waiting times and improve our competitive position” said John Ncube, chief information officer NMB.
NMB began laying down the pieces that would see it transform its processes with the help of the world’s largest technology services firm five years ago.
NMB is one of Tanzania’s largest banks by assets, accounting for some 40 per cent of the industry’s capital, 45 per cent of loan issuances, 48 per cent of the assets, 52 per cent of deposits and 54 per cent of number of branches and investments in government securities.
IBM is now scouring for more such deals in Africa as governments, banks and private companies embark on technological transformation. Last week, IBM announced it had opened a subsidiary office in Tanzania. The firm said it expects Africa to be a strong growth area for the information technology business over the next five years, thanks to growth in banking and telecoms.
Among the products the bank rolled out include the country’s largest ATM network, an online banking platform that allowed a large segment of its customers to monitor accounts remotely, followed a year later by a mobile product that allows over 300,000 users to access their accounts using their mobile phones.
But investing in these technology-heavy products meant the bank had to restructure its legacy systems in order to cut the average transaction time down from days to just minutes.
“With our market expansion strategy, we are actively increasing our ability to provide high-value solutions for our clients and partners across the continent,” said David Sawe, country general manager, IBM Tanzania.
The new subsidiary office is part of a broad programme of investment that IBM is making in Africa covering the creation of new facilities, offices, training, staffing and recruitment, sales and marketing. The announcement follows the recent news of the opening of IBM’s office in Dakar, Senegal giving the firm direct presence in over 20 African countries including South Africa, Ghana, Nigeria, Kenya, Morocco, Egypt, Tunisia and Algeria.
The expanded presence in Tanzania will allow IBM to increase its level of service to clients and partners across East Africa; and deliver more advanced and high-value solutions.
Using a new system based on IBM’s Power servers and storage technologies, NMB has been able to increase its customer base to 1.4 million accounts, expand its number of ATMs to 400 and offer debit cards and mobile banking services to its customers across the country.
Today the bank processes millions of transactions per month and has some of the fastest transaction processing times in the country. The firm is also helping the Tanzanian government as it moves to support the adoption of information technologies and development in key areas such as education, research and development initiatives.
Away from Tanzania, IBM is currently in the process of stepping up its presence in Africa, a market whose potential for growth has been compared to Eastern Europe during the early part of the last decade.
A main catalyst for this focus on Africa was IBM’s win last September of the contract to manage the rollout of Bharti Airtel’s IT operations across 16 countries in Africa. Deals that involve the growing mobile sector and the on-going e-government push throughout Africa have attracted international IT firms, with IBM joining Intel, Accenture and Google in establishing regional bases.
As growth in established markets such as Europe and the US starts to plateau, most companies are attracted by the $25 billion expected to be spent across Africa this year. Research firm IDC predicts that spending in the region will see strong growth of 12.8 per cent, surpassing the $60 billion mark, and driven by hardware spending, as well as spend on packaged software and IT services.
“In 2011, IT markets in Africa will continue to build on the post downturn rebound in spending experienced in 2010. Investments to build out IT infrastructure will gain further momentum in most countries, particularly in the public sector,” said Jyoti Lalchandani, Vice President and Regional MD, IDC MEA.