IBM (NYSE: IBM) has announced details of five strategic agreements in the Kenyan financial services sector as banks across Africa turn to advanced technologies to support rapid growth, increase profitability and launch innovative new services such as mobile and internet banking.
Over the last six months IBM has signed contracts with five of Kenya's leading banks: Credit Bank, Co-operative Bank, Family Bank, National Bank of Kenya and National Industrial Credit (NIC) Bank. The agreements are amongst more than 20 similar deals that IBM has signed with banks across Africa in 2011 in line with the rapid growth of the financial services sector and as technology enables a wave of innovation in African banking. IBM is also working with Africa's leading telco companies to help provide financial services based on increasingly widespread mobile devices. For example, through its partnership with Vodafone, IBM is helping Safaricom to provide its M-PESA mobile money service to over 15 million customers in East Africa.
"Africa is currently experiencing strong uptake in banking services in line with the growth of the continent's middle class and the adoption of mobile and internet banking," said Anthony Mwai, County General Manager, IBM East Africa. "Advanced technologies are helping to drive a wave of innovation across the African financial services sector as banks create new and accessible banking channels and take banking services to previously unbanked parts of society."
According to analysts, Africa's financial services sector is currently worth over $100 billion and will continue to grow by double digits to 2020, outpacing Africa's gross domestic product growth. Retail banking is currently the fastest growing segment predicted to grow at 18 per cent between 2009 and 2020 through increased demand for deposit accounts and the launch of sophisticated banking services.*
In two of the largest IT deals in the East African banking sector to date, the Co-operative Bank of Kenya and the National Bank of Kenya have signed multi-million dollar agreements with IBM to support their aggressive expansion strategies and increase profitability.
IBM supplied Co-operative Bank with Power Systems as well as storage and software as part ofof a major overhaul of the bank's systems.
"Our strength lies in the transformative influence we have had in the lives of over nine million Kenyans who depend on the co-operative movement for banking services. Our investment in IT has helped us to achieve our goal of launching a diverse array of innovative, new banking services and reach new parts of society," said Gideon Muriuki, Co-operative Bank's Managing Director.
In its agreement with the National Bank of Kenya, IBM is providing IT services, hardware and software as the bank delivers on its program of business transformation.
"As we continue our transformation into a privately-owned company, we are constantly seeking the means to make us leaner and more efficient," said Reuben Marambii, Managing Director of the National Bank of Kenya. "With advanced technologies and virtualization tools, IBM is helping us to optimize our resources and provide a wider range of services to our rapidly growing client base."
Family Bank, one of Kenya's fastest growing financial institutions, and IBM signed an agreement to support the bank's drive to reach new markets and launch new products and services.
The bank's regional expansion plan, alongside its introduction of new services such as mobile banking and mortgage facilities, has led the firm to transform its IT systems ahead of a planned listing on the Nairobi Stock Exchange in 2012.
IBM has also signed agreements with Credit Bank and National Industrial Credit (NIC) Bank as locally owned banks across Africa leverage world-class technologies to transform their businesses.
Credit Bank has turned to IBM for a new core banking system to allow it to rethink business processes and improve operational efficiency. Under the terms of the agreement, IBM will provide hardware, software as well as consultancy and services for the implementation, integration and maintenance of the new system.
In line with its continued growth in the region, National Industrial Credit (NIC) Bank selected IBM technologies to help streamline the bank's core banking processes and integrate its existing IT solutions to drive operational efficiencies and improve customer service.
IBM's Momentum in Africa
IBM is actively expanding its operations across Africa as part of the company's continued geographic expansion initiative to increase its presence in key growth markets and support its global growth strategy. Over the last year, IBM has closed a number of pivotal deals in the region as clients in the financial, government, telecommunications, oil and gas sectors seek solutions to help them optimize their operational costs and support business expansion. Earlier this year, IBM announced details of other major banking deals with the Commercial Bank of Ethiopia and the National Microfinance Bank of Tanzania.
"Internet and mobile connectivity has become both more plentiful and a great deal cheaper over the last five years across Africa," said Russell Southwood, CEO at Balancing Act, an Africa-based consultancy and research company. "This allows African banks to focus on high-end products and services using the latest technologies to launch new banking channels. Banks are also using technology to better connect branch networks especially in rural areas which are seeing some of the highest levels of growth."
To drive demand for its services and solutions across the continent, IBM has opened over 20 offices across Africa including those in Kenya, Tanzania, Angola, South Africa, Ghana, Nigeria, Morocco, Egypt, Tunisia and Algeria.