The Computer Society of Kenya

Since 1986

nicBusiness Daily By GEOFFREY IRUNGU

Wednesday, December 12  2012

Mid-tier NIC Bank has spent about Sh740 million ($8.6 million) on a new core banking system to facilitate rolling out of new products to be offered through mobile phones. It will also expand it Internet and branchless banking.

The listed banker said the products will hit the market during the first quarter of next year. Though details were not immediately available, there is a possibility the bank will be seeking to compete with other institutions that have recently unveiled products intended to push both deposit and loan services through mobile and Internet-banking platforms.

Commercial Bank of Africa and Safaricom’s M-Pesa have a partnership dubbed M-Shwari, Equity Bank has the pioneer M-Kesho with the same telecom firm, while deposit-taking microfinance firm Faulu Kenya has Kopa Chapaa with Airtel. Faulu has gone to court to challenge the M-Shwari product claiming it is a duplication of its product.

M-Pesa and CBA will allow interest-earning savings and also offer up to Sh20,000 in loans to customers payable within a month while Faulu Kenya and cell phone services firm Airtel will offer loans of up to Sh10,000.

Standards
NIC Bank joins the list of banks that are currently using T24 ICT platform including KCB and CfC Stanbic. The Central Bank of Kenya also recently installed a T24 system — which, however, experienced teething problems — to enable it monitor the financial systems more effectively.

NIC Bank, which has received several accolades for adhering to international financial reporting standards, has been growing at a steady pace in recent times registering 36 per cent rise in net profit for the first nine months to September at Sh2.396 billion from Sh1.76 billion over the same time period last year. Its subsidiaries contributed Sh154.77 million to its bottom line.

The core business of generating interest income almost doubled, going up by 97 per cent to Sh8.8 billion. The loanbook rose by 21.7 per cent to Sh66.1 billion in the first three quarters of this year while deposits rose by 18.9 per cent to Sh60.1 billion compared to the same period last year.

A source said the bank will freeze recruiting staff as those freed by the installation of the new technology are redeployed to other areas across the bank, including its regional subsidiaries.

One of the major reasons for the bank’s quick growth pace is the diversifying from dominance by asset finance to individual, corporate and treasury products.

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