Fountain Credit Services becomes first institution in Kenya to run its operations in the cloud
GENEVA, Switzerland – 11 October 2012 – Temenos (SIX: TEMN), the market leading provider of banking software, today announces that Fountain Credit Services (‘Fountain’), a new Microfinance institution (MFI) in Kenya, has launched on TEMENOS T24 for Microfinancing, hosted in the cloud. In doing so, Fountain becomes the first institution in Kenya to adopt cloud-based banking services.
By running in the cloud, Fountain has significantly reduced its initial capital outlay – which typically accounts for two-thirds of start-up costs* – as well as its ongoing operating costs, through the ‘pay-per-use’ model. In addition, the cloud will support Fountain’s plans for rapid expansion, as new users and branches can be added seamlessly onto T24, which is running on the Microsoft Windows Azure platform.
In adopting the cloud-based model, Fountain demonstrates the viability of performing credit and lending in the cloud without an on-premise system – a trend likely to become commonplace among banks and other financial services providers in the region. The managed service for Fountain is hosted in Europe and operated by Temenos, delivered through an online connection to Fountain. Relieving Fountain of onsite technology maintenance allows it to concentrate on delivering the highest quality service and products to its customer base. T24 also contains powerful and robust fraud detection capabilities which will help protect Fountain from one of the major issues affecting financial institutions in East Africa. According to research from Deloitte, fraud has cost financial institutions in the region US $48 million in the last 18 months.
The adoption of a core banking system from the cloud represents a shift in IT strategy for new banking entrants in Kenya, lowering barriers to entry and increasing the ability to service the 14 million unbanked – an estimated third of the bankable population. Temenos’ Model bank is pre-configured, based on Microfinance and community banking best practices, delivering the necessary control, efficiency, productivity and scalability, at a low cost for MFIs. Through its delivery of a model bank via the cloud, Temenos is enabling new banks and MFIs to set up with just the need for staff and an internet connection.
Commenting on the launch of the microfinance software, Arch. John Kithaka, CEO, FEP Group (Fountain Enterprises Programme) said:
We chose the cloud solution from Temenos as they offer a complete managed service and incremental upgrades that meet our demands. Our vision for launching Fountain Credit Services Ltd was to deliver the best possible services and products to our customers – Temenos Transact Microfinance and Community Banking (MCB) enables us to do exactly that. T24 MCB is a secure and robust system that will enable us to tackle fraud effectively. Procuring T24 from the cloud brings with it huge economic benefits and provides Fountain with the scalability and flexibility to grow with our customers’ demands.
David Arnott, CEO, Temenos said:
Fountain is a true pioneer, being the first Kenyan financial institution to launch with such a configuration. Relieving the institution of upfront and ongoing core system maintenance will allow it to focus on best serving its customers. As Fountain grows and brings more branches online in 2013, it can obtain the new applications and products to meet this demand from the cloud – essentially creating a self-funding platform for the MFI. Deploying new services incrementally maximises the profitability of Fountain and provides the institution with the foundation to build new revenues from different sections of the market as its business matures.
Through the pay-per-use model, Fountain’s IT costs are low and directly linked to its usage of the T24 service, allowing it to offer highly affordable products and services to its customer base of largely low income Kenyan communities. Fountain will benefit from the flexibility to procure additional services as needed in the future, without developing new infrastructures – for example, mobile payments.
*Based on a study conducted by the Office of Fair Trading in the UK, entitled ‘Review of barriers to entry, expansion and exit in retail banking, 2012’