A survey of factors influencing choice of ICT systems for core banking activities in Kenya
As banks explore their network expansion strategies by adding new channels, new products and new segments, the result has been a dramatic increase in back office and IT complexity, with the consequent stagnating efficiency metrics. Additionally, as the banks continue to face more competitive pressure and in order that they ensure long term competitiveness, these companies must focus increasingly on their core competences. Banking, being a highly information intensive-industry imply that customers demand accurate information regarding their accounts and this information need to be easily accessible and retrievable. As are result, lCT systems for core banking activities are used in the collection, processing, and output of information to users and customers. The choice and the aspect of choice process of lCT systems must be well spelt in order to guarantee that: the alignment between business strategy and lCT is optimal; lCT really enables the business; the components of both the business and the lCT system collaborate and communicate well together; the transformation of the business and the lCT system are feasible; the ICT system is durable and therefore cost effective; both the business and the ICT system are flexible and adaptable in those aspects and to that extent that the business needs; the ICT systems of different companies and private individuals can communicate and co-operate with each other; and that the quality profile of the lCT systems matches the quality profile of the business. It is against this background that the study intended to determine the factors influencing choice of ICT systems for core banking activities by banks in Kenya and also to document aspects of lCT systems for core banking activities selection process. The study used survey design. The population for the research consisted of all the 42 commercial banks in Kenya as at July 2006. The respondents were the IT managers in the respective commercial banks. The researcher used questionnaire approach to collect the data with the help research assistants. A drop and pick later method was adopted. The questionnaire comprised of questions on demographic information of the banks, questions on the relative importance of the factors considered by banks in the choice/selection of ICT systems for core banking activities and questions on the aspects of leT systems for core banking activities selection process adopted by the commercial banks. The data was analyzed using descriptives: mean, standard deviation, tables, charts, percentages and pie charts. Factor analysis was also performed on the importance of the factors considered in selection of core leT systems. Results from the factor analysis show that the most important factors influencing choice of lCT systems for core banking activities by banks relate to system flexibility, system compatibility, system multi-user capacity and vendor expertise. The data also show that sending of request for proposals (RFPs) to interested vendors, explicit setting of terms of reference (TOR) of the selection process and initial creation of candidate list are the major aspects considered in the selection process by banks in choice of lCT systems for core banking activities It is recommended that a clear selection criterion be set in regards to the seven factor components identified. A gain aspects touching on software quality cannot be ignored. The banks ICT system acquisition team should conduct extensive search for software in different sources including but not limited to internet, database searches, conducting systematic research, consulting with special ists, request for proposals based on specific system requirements, review of journals and product brochures. The major setback for this study was ignorance by some corporate to respond to the study questionnaire. However, there is no reason to believe that their responses could have significantly altered the findings since the response rate is representative of the target population. Other limitations included: o Time: due to lack of time, it was not possible to cover other potential respondents like system selection consultants. Their participation could have probably provided an insight into the problem. o Inadequate literature in the subject area: there has not been much research done in the selection of lCT systems for core banking activities to provide comprehensive literature.
SponsorhipUniversity of Nairobi
School of Business, University of Nairobi