Banks Use ICT to Siphon Money
- By Abimbola Tooki
- Published August 15th, 2011
- News
- Unrated
A revelation as to how several millions of naira is mismanaged and siphoned annually by many Nigerian banks under the guise of information and communication technology implementation has emerged.
BusinessWorld Intelligence which has been following the development for sometime can now reveal that IT implementation, especially in the areas of banking software review and upgrade as well as hardware procurement, is used to enrich the pockets of the collaborators in the exercise.
Investigations also showed that many of the bank directors with effective collaboration of their IT departments and vendors engage in over-invoicing that usually negatively affect the overall bottom-line of their respective organisations.
At the last count, about nine banks were involved in these sharp practices in the last one year while implementing various aspects of their IT formations. A regional bank which recently concluded implementation of a new banking software, was said to have looked for an excuse to engage in overhauling of its banking software.
Also, one of the leading banks in the country is currently considering upgrading its banking software with about N7 million, an exercise which industry experts say should cost between N2 and N2.5 million. A local computer manufacturer is said to be a “master-planner” in the game of over-invoicing to settle its collaborators.
Track record of successful implementation is one of the key considerations by banks or any financial institution in the selection of banking software or any software for that matter. Other reasons usually considered are: cost; technology-openness, database, operating system; ability to meet the requirements and reference ability.
A group of analysts in the Nigerian banking industry have equally adduced the all-important “Nigeria factor” as the reason why organizations spend hugely on technology even when they can still do with what they have through a simple upgrade or select a software that meets their requirements or one that offers price competitiveness, value and well rated by international agencies across the world.
Solomon Edun, managing director of Global Infoswift, who has consulted for many of the Nigerian banks in the area of IT implementation, described the situation as “pandemic,” adding that many of the banks that engage in this practice invest heavily in IT but do not usually get returns on their investment. “My only surprise, in all of these, is that the board of these banks ultimately see the mess around such transactions but would not act on time until the banks are brought to their knees,” he said. The tactics revolve around the old dirty ways of injecting doubts, fears and uncertainty in the minds of decision makers. Some decision makers fall for these tactics while others would rather rise to the challenge and plot the appropriate strategy by de-risking what brings about implementation failure. In Nigeria, the former seems to have prevailed in most cases which also explains why most executives fall into the trap.
While many financial institutions around the world are putting off decisions, perhaps due to other priorities as well as continued pressure on budgets, the Nigerian case is different as banks executives are busy planning on how to engage in phony IT projects and implementations.
A decision like this, according industry analysts does not still stand on a sound logic irrespective of how hard they have tried to justify this in the market place. “We expect an assailable decision making from executives and our financial institutions and we also demand more accountability through a transparent, and rigorous process rather than a jaundiced and pre-determined process of justifying spending millions of shareholders` funds just through two or three hours presentation.”
BusinessWorld Intelligence which has been following the development for sometime can now reveal that IT implementation, especially in the areas of banking software review and upgrade as well as hardware procurement, is used to enrich the pockets of the collaborators in the exercise.
Investigations also showed that many of the bank directors with effective collaboration of their IT departments and vendors engage in over-invoicing that usually negatively affect the overall bottom-line of their respective organisations.
At the last count, about nine banks were involved in these sharp practices in the last one year while implementing various aspects of their IT formations. A regional bank which recently concluded implementation of a new banking software, was said to have looked for an excuse to engage in overhauling of its banking software.
Also, one of the leading banks in the country is currently considering upgrading its banking software with about N7 million, an exercise which industry experts say should cost between N2 and N2.5 million. A local computer manufacturer is said to be a “master-planner” in the game of over-invoicing to settle its collaborators.
Track record of successful implementation is one of the key considerations by banks or any financial institution in the selection of banking software or any software for that matter. Other reasons usually considered are: cost; technology-openness, database, operating system; ability to meet the requirements and reference ability.
A group of analysts in the Nigerian banking industry have equally adduced the all-important “Nigeria factor” as the reason why organizations spend hugely on technology even when they can still do with what they have through a simple upgrade or select a software that meets their requirements or one that offers price competitiveness, value and well rated by international agencies across the world.
Solomon Edun, managing director of Global Infoswift, who has consulted for many of the Nigerian banks in the area of IT implementation, described the situation as “pandemic,” adding that many of the banks that engage in this practice invest heavily in IT but do not usually get returns on their investment. “My only surprise, in all of these, is that the board of these banks ultimately see the mess around such transactions but would not act on time until the banks are brought to their knees,” he said. The tactics revolve around the old dirty ways of injecting doubts, fears and uncertainty in the minds of decision makers. Some decision makers fall for these tactics while others would rather rise to the challenge and plot the appropriate strategy by de-risking what brings about implementation failure. In Nigeria, the former seems to have prevailed in most cases which also explains why most executives fall into the trap.
While many financial institutions around the world are putting off decisions, perhaps due to other priorities as well as continued pressure on budgets, the Nigerian case is different as banks executives are busy planning on how to engage in phony IT projects and implementations.
A decision like this, according industry analysts does not still stand on a sound logic irrespective of how hard they have tried to justify this in the market place. “We expect an assailable decision making from executives and our financial institutions and we also demand more accountability through a transparent, and rigorous process rather than a jaundiced and pre-determined process of justifying spending millions of shareholders` funds just through two or three hours presentation.”
