IBS Journal Supplement 2015
Head in the clouds
A project to implement a core banking system on the cloud requires compromises but has much to recommend it. How did Kenya-based start-up microfinance institution (MFI), Premier Group, get on?
What does a core banking system im- plementation look like when it is on the cloud? The only institutions that know the answer at present are small ones, primarily in the microfinance sector. Well placed to comment is Tim Carson, CEO at Kenya-based microfinance institution (MFI), Premier Group, and some of his col- leagues. They were previously at another MFI (Micro Africa Ltd) which was a user of a traditional solution for this sector, Fern Software’s Abacus, before starting their new venture using a core system from cloud specialist, Mambu. Starting from scratch, the founders had a good idea of what they wanted this time around, says Carson. Working with a local consultant, Software Group, Premier undertook a system selection, looking at the likes of African specialist, Neptune Software, with its Orbit-R product, Dutch newcomer, Five Degrees, Fern Software, and Temenos. Mambu was a relatively late entrant into the mix, picked up by word of mouth, and ended up shortlisted alongside Temenos. ‘We really liked the look and feel of
Mambu,’ says Carson. It has a much newer system than the vast majority on the market, having launched in 2013, and it has gained considerable traction, mainly among MFIs, since then. There was also a significant difference in terms of costs. Instead of all of the traditional upfront costs of a standard implementation with Temenos, the pay-per-use model of Mambu was extremely attractive. Also im- pacting the cost was the expectation of a much reduced in-house IT team, without all of the ‘headaches’ of IT infrastructure and tasks such as end-of-day batch runs, says Carson. In addition, there was the promise
of a much faster project and, indeed, the bank went live inside two weeks.
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Given its need to swiftly open its doors for business, this was a major benefit but it did require a different mindset, says Carson. It had to think differently about aspects such as the set-up of its products, fees and charges and disbursements. There is an element of ‘one size
fits all’, says Carson, so the bank had to question whether it really needed certain process steps. In the end, by adapting the bank to the system, there was more or less a complete fit, he says. As an example of the type of workaround that was need- ed, to cater for Premier’s group lending model, it had to set up an additional user called a group treasurer. The first week of the project was
spent setting up the products, general ledger and organisational structure, and the bank went live at the end of the second week. In fact, there have subsequently been a fair number of changes, with most of these being incorporated by Mambu free of charge as they were deemed by the supplier to be of generic use for other customers. Out of 15 or so amendments, Premier has only had to pay for a couple. The areas needing changes are described by Carson as ‘shortcomings not show-stoppers’ and the biggest issues were on the account- ing side but the supplier was quick to respond and all have been resolved. A benefit of the cloud model is that
Premier and Mambu are able to look at the issues together, online, whereas previously there were often problems communicating these with Ireland (where Fern Software is based), in part due to dial-up issues. Changes are received at least ten times faster than with the non- cloud model, says Carson. The changes have been delivered
through upgrades but these are more or less ‘non-events’. The upgraded version
case study: premier group
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