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IBM's focus on Africa finance sector bears fruit

o Rebecca Wanjiku
29.06.2011 kl 22:05 | Computerworld Kenya

IBM's decision to focus on Internet banking and integration with mobile devices seems to be bearing fruit as companies modernize systems across the region to pursue new revenue streams.

 

IBM's decision to focus on Internet banking and integration with mobile devices seems to be bearing fruit as companies modernize systems across the region to pursue new revenue streams.

IBM has identified financial services, telecommunications and the public sector as areas on which to focus. The growth of connectivity in the region coupled with a lack of investment in technology has meant the region has had few legacy systems, and thus must adopt new technology to cater to growing demand.

"IBM has realized that the time for Africa is now and is using what they call analytics to identify challenges and potential efficiency gains for all the three sectors," said Stanley Kamanguya, an analyst at IDC East Africa.

IBM is supplying technology to the Senegalese and Cameroonian finance ministries, and in the financial sector, the company is upgrading systems for banks in Nigeria, Namibia, Kenya and Ethiopia.

Commercial Bank of Ethiopia (CBE) is the latest financial institution to enter an agreement with IBM to upgrade its system, which was a mixture of manual operations and Hewlett-Packard and Sun systems. With 2 million accounts and 372 branches, CBE is the biggest in Eastern and Central Africa in terms of branch networks and is seeking to open 500 more branches in the next five years.

The value of the five-year agreement was not announced.

"The financial services sector is quickly transforming; banking institutions are facing challenges that come with expanded infrastructure while still trying to keep [up-to-date] with new technologies like Internet payments, e-commerce, e-banking and m-banking as well as regulatory compliance and consumer protection issues," Kamanguya said.

The new IT infrastructure at CBE is expected to be based on IBM Power Systems, IBM System Storage DS8800 disk storage system, and IBM Tivoli and IBM WebSphere software, according to IBM.

Ethiopia recently opened up its IT sector with the entry of the SEACOM fiber-optic cable, and the deal is expected to further strengthen its relationship with major credit card providers such as Visa and MasterCard, while serving rural communities that benefit more from the growth of mobile-phone-based services.

Analysts in the IT sector view growth in the number of mobile developers and applications as one of the key considerations in the choice of a technology provider.

"Growth of mobile devices use means that there is now a huge population that can access various services that a service provider can leverage on to boost the profit margin -- for example, apps for mobile financial services," said Loren Bosch, country director, Internet Solutions Kenya. "The choice of a technology provider would involve identifying one who understands the target markets' core needs, is very creative and innovative, and has highly sophisticated infrastructure to deliver on this."

While IDC expects mobility to be a major reason for the financial sector to opt for IBM, the desire to reduce operational expenditure is also expected to drive more players in the sector to adopt newer systems.

Keywords: Industry Verticals  
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