Fountain Credit Services, a local micro-finance institution (MFI), has partnered with banking software vendor TEMENOS in a move that will enable it become the first institution in Kenya to run its operations in the internet cloud.
Under the deal, Fountain Credit Services has deployed Temenos cloud-based T24 core banking infrastructure which will help it significantly reduce 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.
“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,” said John Kithaka, CEO, Fountain Enterprises Programme, adding that the system is secure and robust and will enable the firm tackle fraud effectively.
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.
A member of the FEP (Fountain Enterprises Programme) Group of companies and founded in 2011, Fountain Credit Services Limited (FCSL) has rapidly grown and currently has 20 operational marketing offices spread in over 18 Counties in Kenya. The firm aims to meet the financial needs of rural and urban Kenyans left out by the mainstream banks and most Microfinance insitutions in an innovative and sustainable way.