I have learned that various indigenous banks in East African countries are looking to modernize their systems and processes. This has emerged after more than 40% of them posted losses in first half of 2012 due to bad debts and a soft regional economy that is largely dependent on debt ridden Eurozone.They posted a net loss of over $20 million on that period ending June. Chief executive officers and managing directors of several banks have said their banks have thoroughly reviewed their loan books, systems and processes after losses in the first half of 2012.A CEO is spoke to who is privy to the regional plans said the banks had emerged more as an organization from the year. Several banks are embarking on projects including the establishment of a shared services Centre for human resource, Information and Technology and Finance by the first half of 2013.Information technology expenses for East Africa banks for 2012 grew to $43.2 million. Most banks are essentially paying for systems during the pilot and almost 60% of them have projects that are currently in the implementation stage.The CEO also hinted to me that his bank was working developing applications to leverage the customer relation management, which would allow his bank staff to create customer accounts in 28 clicks rather than 96 previously.
While talking to him,he also indicated a new preference for the software as a service model, instead of hard-wired, on-premise systems, to tap into the technologies available to its larger-scale competitors. However,he did not disclose to me any other cloud services his bank could consume, noting that he did not expect any massive shift in its systems besides the current implementations.East African banks IT spending next year is expected to continue rising at current levels as most banks had no need for any large core banking platform overhauls.Another bank CEO I spoke to, revealed to me that plans to invest in customer facing systems, including getting its online platform user-friendly but he did not disclose to me the technical details. At the moment, over 98.5% percent of East Africa residents bank consumers currently opened their accounts in a branch and a research in my possession indicate that those processes were rapidly moving online and through agency banking. There’s no doubt that technology is at the forefront of the minds of consumers. Most banks are using multiple sources of origination, whether that be in branch, mobile, online and increasingly through social media platforms. East African banks hope their systems and process improvements also would dramatically cut their time it took to approve loans from average 720 hours currently, compared to an industry best of five days and one hour in countries like my home country of Australia.