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African banks face costly upgrades


Johannesburg, 04 Dec 2002

Up to 300 banking operations throughout sub-Saharan Africa need to upgrade software systems to keep them competitive and offer specific services, but the high costs and the importation of skills is hampering this.

Systems integration and consultancy company Business Edge, which specialises in supplying services and consulting to banks in the English-speaking portion of African countries, has targeted this as a market to help minimise the costs of support, software product selection and licence fees.

Business Edge director Hennie Pretorius says while there is little that can be done about the licence fees, something has to be done about software selection and the support that banks need.

"African banks have to also pay a lot more for the customisation of their software. For instance, in some countries power failures are an everyday occurrence, but closing a branch is not an option. Another factor is that they operate in multi-currency environments where people regularly exchange one currency for a local currency. These issues are not found in SA and other more developed countries."

Pretorius says there are two general approaches available to African bankers. They can simply decide to do whatever is necessary and replace their old systems with new ones, and have whatever integration and conversion projects that are necessary done as fast as possible. The other option is to take a measured approach and determine what they actually require and what solutions are available.

"This generally requires extensive research into what the company`s and its competitors` immediate and future requirements will be," Pretorius says. "Each bank`s operational requirements need to be mapped out first and the relevant non-technical decisions made - such as centralising certain functions or rationalising product sets. Once this is accomplished, research into the relevant products available to serve these new requirements cost-effectively must be undertaken."

The information gained will allow the bankers to develop new technology strategies using a combination of vendor solutions and as much of the bank`s existing infrastructure as possible. The "all-new" approach may look good on paper, but the best results are to be obtained in leveraging existing technology infrastructure and systems, and combining them with the latest the technical world has to offer.

Pretorius feels that most African banks will need to draw on the services of independent third-parties to help formulate their strategies and product selection.

"Many banks find themselves in the unenviable situation of still using older versions of software that vendors no longer support. These banks don`t have many options other than to upgrade or replace their systems. If they do decide to upgrade to new versions of the software, all previous integration and customisation may have to be redone, increasing the project risk dramatically."