Risk Factors Influencing Implementation Of Temenos T24 Core Banking System Projects By Commercial Banks In Kenya: A Case Of Nic Bank Kenya Limited

Abstract

This study seeks to establish the risk factors that affect implementation of T24 core banking systems in Kenya. Implementation of core banking systems has always been a daunting task to most banks. The biggest challenge for banks lies in knowing what to do and where to start. According to Kudav & Megha, (2013) many core banking transformation programs encounter serious risk factors midway through the project due to poor coordination and lapses in communication between the vendor and the bank project management teams. It is important to point out that despite the numerous studies undertaken, there are limited findings especially on risk factors influencing implementation of core banking systems in developing nations such as Kenya whereby the majority of the banks, both private and public sector organizations, have embraced core banking systems in the past two decades with an objective of improving their service to the public. The objectives of the study was; to identify the risk factors faced by National Credit Bank Limited during the implementation of its T24 Core Banking System, to establish how project risks management influence the implementation of core banking system by commercial banks in Kenya, to determine critical success factors in core banking systems pre-implementation, implementation and post-implementation phases by NIC Bank Kenya limited and to propose Core banking systems implementation best practices to NIC Bank Kenya limited. This study used descriptive survey research design approach to address the questions raised in the document. The population for this study comprised of all staff from departments of the bank who were charged with core banking system development and implementation. For the purpose of this study, 100 staff were interviewed. The researcher used primary data. The researcher concluded that poor requirement gathering, budgetary constraints, team skill level and migration discrepancy risk factors can influence the success of a T24 core banking implementation process. Depending on how well such risks are managed by the implementing organization, such risks greatly influence the quality of the end product (the delivered system). The researcher observed that, as much as the core banking implementation budget is determined early even before the project begins, cost escalations should be properly risk-managed through the bid negotiation and contractual stages itself. Since core banking implementation projects usually have long project implementation cycles sometimes spanning over years, and therefore there are inherent risks of slippage and cost overruns. Strong project governance structures and risk-management practices should therefore be an inherent part of project management. The researcher also concludes that data migration knowledge on implementation of T24 projects, consideration of quality of source data, data clean up before mapping and extraction and transformation of data from multiple legacy systems as well as consideration of volume of data to be migrated are fundamental processes to ensure the highest level of accuracy possible during data migration. The researcher also concludes that during the selection of systems, it is critical to ensure that user requirements are obtained to ensure that the system purchased meets the strategic goals of the organization and will fulfill the needs of the business / organization. On matters team skill level, an organization must retain control over the project management rather than outsourcing this function. Strategic workforce management is necessary to ensure that an organization has the right human resources capable of developing and delivering the required core banking system. Core banking transformation projects require a lot of highly skilled resources and significant investments over a period of time. It is therefore necessary to adopt an appropriate implementation strategy that takes into account the available financial and human resources.