Kenya Commercial Bank


One other notable – and subsequently controversial – order came in mid-2001. This was from Kenya Commercial Bank, as it embarked on what it claimed would be the largest banking IT project to date in east Africa. It took Finacle as the basis for a complete overhaul of its core processing systems, part of a total reengineering of the bank. The deal was Infosys’ largest outside of India, and its first in Kenya. The bank was the largest in the region, with 100 branches


in Kenya and a direct presence in neighbouring Tanzania at the time of the selection. It had around 500,000 customers. Formerly state-owned, it had recorded losses for the previous two years, culminating in a new senior and middle management. One of those to join was Siraj Siddiqui as IT director. He said his mandate was to get rid of the bank’s existing ‘hotch-potch’ of systems and put in a ‘state-of-the-art, on-line, real-time core banking system’. The bank had been using Baton Rouge’s TC/3 back office system, its predecessor to TC/4. While this was installed on a centralised basis, it was partitioned into two data centres which did not talk to each other. There were also support issues, said Siddiqui. Within a nine month evaluation, the bank looked at a range of systems, including those of Kindle, I-flex, Unisys, Phoenix International/London Bridge, FNS, Commercial Banking Applications and Fernbach Software. The bank decided not to consider TC/4. The priorities for the bank when selecting the new system were improved customer service, reduced operational costs, improved MIS, and the accelerated introduction of new products. Finacle was deemed to provide the closest fit to the bank’s business requirements, said Siddiqui. It was also felt that the system was built on a ‘modern technology platform using internet technologies’. He also cited Infosys’ track-record and ability to provide local support.


Siddiqui described the timescales for the project at Kenya


Commercial Bank as ‘very ambitious’. The roll-out to all 113 branches was scheduled for completion within 18 months. However, he admitted that the challenges were ‘immense’. They included problems with the country’s telecoms infrastructure, poorly trained staff, and the need to renovate and re-cable the branches. The deal included ITMS 2000. It was not long, however, before the Kenya Commercial


project became embroiled in scandal, attracting the unwelcome attentions of the Kenyan government and press, and causing considerable embarrassment to both bank and supplier. According to Kenya’s Daily Nation newspaper, the trouble began later that Summer, when a civil service official received documents from Kindle suggesting that the selection process had been skewed in Infosys’ favour. Siddiqui, the man in overall charge of the selection, had allegedly been passing information and encouragement to the Infosys employees who were bidding for the contract. Suspicions were aroused as Infosys’ $7.1 million quotation for the project was more than twice as much as that of I-flex. An audit committee was established by the bank’s board to investigate the allegations. Its report pulled few punches, the newspaper claimed. The acceptance of Infosys’ much higher offer was difficult to justify, the report apparently said,


192


given that the $2.9 million I-flex proposal met 85 per cent of the criteria laid down by the bank. Infosys had seemingly been given the chance to enter into price negotiations with the bank before the selection was made, an opportunity denied to Kindle and I-flex, and unlike them it had not been required to include the cost of services in its tender document, resulting in an unfair comparison between the three. The grounds on which Kindle was suddenly eliminated


from the process were called into question, as was the decision to award Infosys an additional hardware evaluation contract. Perhaps most damagingly of all, the email correspondence between Siddiqui and the winning supplier was brought into the open. Siddiqui is reported to have told Infosys that ‘I am hoping that you can generate... fireworks at our product walk. I am sending you a detailed letter on this as requested... so that you can start preparing’. This conduct, the committee’s report declared, ‘left a great deal to be desired’. The audit committee stopped short of recommending that


the contract be cancelled. The fact that a sum approaching a million dollars had already been paid to Infosys was cited as one reason for this. The bank’s board, however, was alleged by the Daily Nation to have ordered Siddiqui’s dismissal, and the drawing up of an agreed budget and project plan before implementation work was allowed to proceed. The bank’s chairman, Gareth George, vehemently denied this, however: ‘A project plan and budget are already in place,’ he asserted, adding that ‘Siraj Siddiqui remains our director [of] IT’. In fact, Siddiqui subsequently departed. George claimed that the project had been endorsed by the bank’s board of directors and that it was still very much in progress, although the final decision on whether or not to proceed still remained with the bank. The hardware evaluation was also still under way, he said, with a decision from Infosys expected shortly. The official statement from Infosys concerning the affair denied that there was any irregularity in the bank’s selection process: ‘We found that the entire evaluation methodology and process were thorough, intensive, transparent and above board. Infosys and Finacle emerged winner [sic] based purely on their merits.’


By October 2003, the project remained on hold. ‘There


have been some changes in management at the bank,’ said Infosys vice president, Girish Vaidya. These included the appointment of a new IT director, Tony Githuku, who joined the bank directly from I-flex’s African distributor, Fintech. ‘We are in touch with the new management, and they are looking at what they need,’ said Vaidya. ‘Nothing has been implemented, but the training is complete. We haven’t been told that the bank doesn’t want to go ahead with the implementation.’ No one from the bank was available to comment. It wasn’t until mid-2006 that news came that the bank was back out in the market looking for a core system, with an RFI going out to relevant suppliers. It was not known if these included Infosys. This time, it looked as though the selection was being closely monitored by the Kenyan government. In May 2007, it was announced that Temenos’ T24 had been selected.


Universal Banking Systems Market Report | www.ibsintelligence.com


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