There are indications that some of the nationalised banks are currently discussing some business deals that are wasteful and would not add to their bottom line on the long run. BusinessWorld Intelligence can reveal, for instance, that the current managements of Mainstreet and Keystone Banks are reviewing some of the information technology projects embarked upon by the last administration which was appointed by the Central Bank of Nigeria (CBN), with a view to either dismantling them and implementing new ones or upgrading those projects even at a time when they are supposed to be performing optimally.
These two banks spent about N2 billion to put in place state-of-the-art software and hardware that have between five and 10 years lifespan but which are now being put up for dismantle less than two years of implementation.
Specifically, Mainstreet upgraded Globus G13 to Temenos T24 system at a cost of N257 million. IBM hardware from CBC Emea was selected to run on the T24 banking application at a negotiated cost of N317 million while the EMC storage was purchased through BBT to improve the bank infrastructure base with proven speed in end of day (EOD), End of Month (EOM), data backup speed and reliance at a negotiated cost of N101.2 million. BBT had a joint presentation with EMC, and they elected at taking out the three year support cost and offered a further discount of eight per cent on the storage cost and advance an attractive payment option stating that the bank can pay what their budget can accommodate now and pay the remaining in the first quarter of the following year. This was conceded to.
But while reacting to the new step being taken by the management of the bank, a senior staff member in the IT department of one of the banks, said “some of these things are common in the Nigerian banking industry but are mostly executed for selfish reasons and personal gains.” This development is also capable of reducing drastically their returns on investment.
BusinessWorld Intelligence also revealed that Mainstreet Bank undertook the last IT implementation after a careful study of the needs of the bank by Atos Origin, an international IT services consultant. Atos Origin submitted a comprehensive study of the bank which defines the gaps in its IT division and listed projects that can move the bank’s IT platform to a stage where it meets its business strategy plan,  ensuring that IT becomes a competitive tool for service and product delivery.
A reliable source within Mainstreet Bank disclosed last week that two software vendors have been invited to conduct fresh demonstration of their products in the bank while Keystone has undertaken the same exercise with three vendors. Investigations show that the two banks may spend almost double the previous cost if they settle for new IT systems.
Industry experts noted that banks that change their core banking systems may be disillusioned by poor proceeds, unless they compel additional business initiatives in comparable fashion. Banks that believe the sudden IT change may yield positive and quick income are likely to be disappointed when the returns do not meet the expectations. Therefore, there needs to be a reasonable expectation given the timeframe of parallel expectations when the business objectives are properly aligned with the IT strategy. This measure allows the IT executive time to monitor the performance of IT resources and the investment, and the turn-around time required to yield the proper business value and monetary gains of the bank.
According to a McKinsey research, European Banks have excelled more than their Nigerian and other African countries’ counterparts when it comes to good governance. This can largely be attributed to sound fiscal policy, transparency and openness of financial institutions, good monetary policy and proper leadership. Asian and African Banks, compared to European Banks scored lower, signifying that well-run banks do a good job of managing their information technology.
Also, many Nigerian banks have difficulty translating their IT investments into real business value; they may invest in new technology, a business intelligence solution, an enterprise resource planning application and an enhanced customer-relationship management (CRM) system that the business doesn’t adopt.
There must be a better alignment between business strategy and objectives with IT strategy. If these two do not align and collaborate with one another, the organisation will suffer dire consequences.