At a Glance
• 7-10% month-on-month growth in customer volumes as more low-income citizens access services
• 15 minutes to onboard and originate loans for new customers and 4 minutes for existing clients
• 40% faster time to market for innovative new products helps sharpen competitive edge
• 25% more loans processed every day than with legacy systems and manual workflows
• Migrating successfully Temenoscore banking from on-prem to SaaS
For 25 years, Barko Financial Services has helped low-income South Africans to improve their circumstances and personal wellbeing by providing simple, ethical, and affordable credit. With more than 200 branches, the microfinance institution (MFI) delivers loans and insurance cover to more than 600,000 customers, many of them working in the agriculture, mining, and construction sectors
Tielman Walters, Chief Technology Officer at Barko Financial Services explains: “We recently unveiled plans to transition from an MFI into a mutual bank, with a much wider range of digital services. This will help us increase our reach among citizens underserved by larger banks, and make a more positive social impact.”
Setting ambitious goals
To enhance its lending business and support its expansion strategy, Barko targeted new technology capabilities. Previously, the institution managed loan repayments using legacy systems from a local vendor, but these offered limited scope for expansion or innovation. And for client onboarding and loan origination, Barko relied on time-consuming and labor-intensive paper-based manual workflows.
“To achieve our growth objectives, we needed a much more advanced and scalable back-end platform, which would enable us to develop and launch new banking services quickly. We also wanted faster, streamlined onboarding and origination processes. This would not only improve efficiency and save time for our internal teams, but also ensure a seamless customer experience.”Tielman Walters, Chief Technology Officer at Barko Financial Services
Achieving front-to-back transformation
Barko assessed potential vendors before deciding to work with Temenos to lead the modernization program. In the first stage of the collaboration, the institution replaced its legacy solutions and manual workflows with an on-premises deployment of Temenos Transact and Temenos Journey Manager in the cloud.
Barko currently uses the Temenos solutions to support its lending operations, processing thousands of transactions every day, as Tielman Walters explains: “The Temenos solutions handle spikes in business volumes without a hitch. It is also quick and easy to change our front-end interface whenever required by regulators. And maintenance is much simpler now, too. Thanks to the resources available in the Temenos Learning Community, we have developed a comprehensive knowledge base on the solutions.”
“We were impressed with the investment Temenos makes into research and development. We also knew the development tools from Temenos would cut time to market for new products, while the API capabilities would enable seamless integration with many third-party solutions. Temenos Transact offers great scalability, too, which will help as we expand our operations.”Tielman Walters, Chief Technology Officer at Barko Financial Services
Staying ahead of the technology curve
In the second phase of the partnership, Barko is preparing for the move into retail banking by upgrading its back- and front-end capabilities. The institution is moving to the latest versions of Temenos Transact and Temenos Infinity running on SaaS on Microsoft Azure, and will also deploy Temenos Payments Hub, Temenos Data Hub, and Temenos Financial Crime Mitigation. Barko is working with three Temenos partners to execute the project: Stoics, Tailwind, and GCI—plus Temenos Project Consulting Services (TPCS) on the cloud migration.
“The support from our partners has been excellent. Moving to SaaS will help to safeguard business continuity and keep our critical banking systems available at all times. We will also be able to scale elastically in line with our workloads, which will improve cost efficiency. And Temenos will provide regular upgrades, ensuring we stay ahead of the curve in terms of capabilities,” adds Tielman Walters.
Enabling a radical shift in delivery model
The partnership with Temenos has helped Barko to enhance its mobile and digital channels. Traditionally, the institution issued loans to customers in cash via its branches. When the pandemic struck and the government enforced lockdowns a rethink was urgently required. Using Temenos Journey Manager, Barko built a workflow allowing existing customers to apply for loans, authenticate themselves, and receive funds via mobile phone.
“With Temenos, we developed an innovative concept in just six weeks to ensure we continued to serve customers through the pandemic. We simply send a USSD code to verify customers quickly and efficiently. This has had a huge impact: we are now 80 percent cashless in our operations, and people prefer to collect funds without visiting a branch. It only takes four minutes to pay out loans to existing customers.”Tielman Walters, Chief Technology Officer at Barko Financial Services
Streamlining onboarding and loan origination
For new customers, too, Barko now offers a faster and more seamless onboarding journey. The Temenos solutions enable the institution to accept PDFs and digital documentation from loan applicants, rather than working with cumbersome paper versions—improving internal efficiency and accelerating customer acquisition.
“We now onboard and pay loans to new customers in just 15 minutes, ensuring they enjoy a frictionless experience. The robust controls in the Temenos solutions eliminate the need for time-consuming manual double-checking of paper documents to authenticate new customers. This streamlined onboarding and loan origination workflow has also helped to cut our customer acquisition costs.”Tielman Walters, Chief Technology Officer at Barko Financial Services
Supporting market-leading innovation
With Temenos Transact, Barko has also accelerated product development. For example, the institution recently launched a new lending option with a flexible repayment scheme, and is currently testing a series of retail banking services in readiness for its go to market.
Tielman Walters continues: “By replacing our legacy systems with Temenos, we cut time to market for new products by 40 percent. We can innovate and set ourselves apart from our competitors with flexible lending and retail banking services that will help low-income South Africans to thrive.”
With a robust core platform from Temenos, Barko is also handling higher volumes of loans and reaching more South Africans than ever, as Tielman Walters confirms: “We are now processing 25 percent more loans per day. And we are seeing month-on-month customer growth of between seven and ten percent as well as more recurring business, so we are having a positive impact on more and more people.”
Making to move into retail banking
Barko expects to receive its full mutual banking license in the coming months. In that time, the institution will continue the implementation of the integrated Temenos environment, as well as continuing to develop and test new digital banking services purpose-built for the low-income market segment.
“Our collaboration with Temenos has made us a more competitive player in the microfinance sector in South Africa, and helped us fulfill our mission to empower low-income citizens. We have a great relationship with Temenos—they offer real expertise and excellent solutions, and we’re confident that they will help us to flourish as we transition into a challenger bank.”Tielman Walters, Chief Technology Officer at Barko Financial Services