| dc.description.abstract | 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. | en |
