NCBA Bank: Investing in technology to offer inclusive financial services

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Technology is fast becoming an integral part of day-to-day life. According to data released by the World Bank, over 1.7 billion adults worldwide still don’t have access to traditional modes of banking or a bank account.

For this reason, more organisations are looking to bridge the financial services gap globally by offering inclusive financial solutions that empower all.

With over 64.7% of mobile phone owners failing to have access to a bank account, mobile phone penetration remains key in financial inclusion. Nairobi, the capital of Kenya, has stood out as a hub for innovation and strategic use of mobile technology.

People from all walks of life can access traditional banking services, such as savings and credit, using their mobile phones on the M-Shwari platform.

Established eight years ago by NCBA Bank and Safaricom, M-Shwari has empowered millions of customers across Kenya by enabling real time access to financial services to its over 35 million users. The service leverages on mobile penetration to enhance access to financial services across the country.

With the tremendous growth observed and an increase in customer needs, M-Shwari needed to further enhance its capabilities as well as position itself for growth.

Digital transformation has increasingly become a key enabler. However, there were still a few challenges that needed to be addressed:

  • The live network performance was finding it increasingly difficult to support the bank’s rapid business development or cope with high traffic stemming from customers’ mobile financial interactions due to the fast growth of mobile saving and loan services.
  • There was increased need for fast technical support for new services and features.
  • User experience was greatly impacted due to slow response from the system.

NCBA Bank took on an ambitious project with Huawei, through its partner MuRona Technology, that would see it build a next generation core banking designed to suit the project’s unique business needs.

Huawei has served more than 2,000 financial customers in over 60 countries and regions, including 47 of the world’s top 100 banks. It strategically cooperates with 20 large banks, insurers, and security companies around the world, and has grown into a trusted strategic partner for financial institutions in digital transformation.

Huawei has adopted an open collaboration approach in the finance field; developing more than 1,200 solution partners, 4,200 service partners, and more than 20,000 sales partners worldwide.

MuRong Technology, one of Huawei’s solution partners, is a leading provider of new digital core banking systems and IT solutions for scenario-specific finance. MuRong Technology offers professional business experience, advanced technical advantages as well as excellent cross-border service delivery capabilities.

Amid the pandemic, Huawei and MuRong Technology focused on NCBA’s needs by conducting a comprehensive analysis of the bank’s services and designing a rigorous digitalization solution.

After extensive testing for a year, they delivered a next-generation digital core banking system in November 2020. The solution included migrating the services of 80 million small deposit and loan accounts as well as consumer loan accounts, which allowed the new system to provide better services with increased capabilities and performance.

This is Kenya’s first core banking system that uses distributed architecture, slated to support the bank’s business development over the next decade.

On the first day of operations, the system migrated data from 60 million accounts all at once, reaching 420 TPS at the peak of system performance. Built on a distributed DevOps framework, the next-generation digital core banking system provides agile and robust technical support for NCBA Bank’s digital financial services.

Huawei’s private cloud platform facilitates centralized resource management and flexible provisioning; while GaussDB supports night reports and complex queries, cutting the expenditure of traditional databases.

At the same time, the distributed financial services system can scale horizontally, process highly concurrent requests, and eliminate single point of failure (SPOF). The underlying private cloud platform and distributed financial service system ensures the running of the system remains stable.

Ultimately, this makes the system less complex, reduces the cost of middleware overhead, while also supporting future e-banking system migration and rapid financial service innovation.

The new core system allows for:

  • Higher transaction capability: System performance increases from 60 TPS to 420 TPS, supporting the bank’s rapid business growth.
  • Lower total cost of ownership (TCO): There are fewer costly databases and ESB requirements. The number of databases drops from 108 to 56 by introducing new architectures and technologies. More flexible API gateways are used to replace ESBs, improving system flexibility and slashing the 5-year system TCO by more than 50%.
  • Enhanced system flexibility and reliability: Multi-cluster design increases system reliability to 99.99%. The new architecture at the software layer enables horizontal system expansion and can support fast service rollout in the future.

The new M-Shwari core banking system opens up a world of possibilities for the bank, enabling it to deliver its promise to customers. At the heart of NCBA Bank is a drive to empower customers with the right financial solutions to enable them to achieve more.

Furthermore, NCBA Bank has reshaped its position as an innovator in the financial services sector by building the next-generation digital core banking system. “The choice of technology used has enabled NCBA to execute their business model with important considerations such as customer experience.

Today, every business is about experience. We offer customers world class experiences while consuming financial services. We have an aim to be Africa’s most valued digital service platform,” says Eric Muriuki Njagi, Director of Digital Business at NCBA Bank.

The cooperation between NCBA Bank and Huawei has laid a foundation for the bank’s long-term sustainable development. President of Huawei CLOUD Southern Africa Business, Stone He, said the joint investment into building an excellent cloud system for NCBA Bank was a win for the company.

“Coupled with our extensive experience and NCBA Bank’s willingness to venture into a higher level of digital growth, we are impressed with the relative flexibility and ease of this partnership. The banking sector is a key driver of economic growth for Kenya and Huawei CLOUD is pleased to be part of such an impactful and influential project,” said Stone.

He added that the joint investment into building an excellent cloud system for NCBA Bank was a win for the company.

In the coming years, FinTech’s will continue to grow, Bank 4.0 will become a reality, and new banking services will emerge. NCBA Bank is addressing the current bottlenecks while accelerating digital transformation to become a leader in African financial services and embrace Bank 4.0.