Infosys-owned core banking software, Finacle has been in the news lately for good. For instance, one online tech news platform recently reported that a leading Nigerian bank, Guaranty Trust Bank (GTBank) has finalised plans to migrate its operations to the banking platform.
Finacle was created in 1999 as a core banking software suite. It is the platform of choice for well-established financial institutions, financial technology organizations (Fintech), digital-only banks, and, non-financial companies.
With over 6,000 employees today, Infosys claims that financial institutions in more than 100 countries rely on the software to help more than a billion people and millions of businesses save, pay, borrow, and invest better. The software company reported a revenue of $18.6 billion in the past year.
In 2006, Finacle reported that it generated about 69% of its total revenue from overseas locations, largely from banks and financial institutions in the EMEA region. A significant portion of this sum was made in Nigeria, a country that it entered in early 2000 using a local technology distributor and partner, Computer Warehouse Group Plc (CWG), then known as Computer Warehouse.
The story of the CWG probably best summarises the power of belief and passion. In over 20 years the Group has grown from a company founded with a seed capital of about $35,000 into a $130 million revenue company, with over 650 staff spread across Nigeria, Ghana, Uganda and Cameroon.
CWG commenced operations as CWL Systems in 1992 as a technology infrastructure sales company in Lagos, Nigeria. It was founded by Austin Okere, a computer science graduate who had established himself as a highly successful technology sales professional for over four years.
In 1994, its Network and Communications Sales arm, DCC started with Austin’s co-founder and operations guru, Phillip Obioha. Four years later, the company’s software arm, ExpertEdge commenced operations on the strength of Austin and Phillip’s co-founder and tech genius, James Agada.
For over 25 years, Computer Warehouse consolidated its systems integration skills by partnering with best-in-class global companies to leverage their technologies and best practices. The list of its partners includes global OEMS like Dell, Microsystems, Oracle, Infosys, Cisco, Gilat, Netapps, HP and more.
In November 2013, CWG Plc became the first tech company to be listed on the Nigerian Stock Exchange. The listing of the shares boosted the market capitalisation of the NSE by about N14 billion, while CWG became the highest capitalised security in the ICT sector of the exchange.
For Austin, the eventual success of his company rests largely on the diversified strengths of these founders. He explains the mix thus:
“In the team, I was the visioner. I have the DNA of an entrepreneur and hustler. I can see before anybody I can see more than anybody. Philip was an engineer turned operations guru. And, we had James who was a wizard with technology. It was a tripod and that tripod was well balanced. We all brought two or more useful skills to the table.”
So much is known about CWG’s operations in Nigeria and the trajectory of the banking sector in the country. However, not so much has been documented about how the technology company has supported the operations of over 50% of the banks in the country. Neither is there a true story about the genesis of Finacle’s foray into the Nigerian market.
This article documents how Finacle grew from being the fastest-growing banking application in Nigeria within a few years of its entry by signing on small and major Nigerian banks to become the leading core banking application. It is the story of grit, innovation and excellence.
The beginning
In the year 1999, Austin Okere and his team had a software application for banking called the Xpert REB (Remote Electronic Banking). This could be described as the early stages of fintech evolution. The application could only carry out what was described as Telephone banking and PC banking.
So with Telephone banking, you can do basic things like query a front-end system for your previous account balance, stop a cheque, know your current balance or whether you have enough money to write a cheque etc.
PC banking allows customers to query the system from their office rather than go to the bank to find information. However, the technology does not allow for transactions to go straight through.
During this time, the banking space witnessed many failed core banking software implementations. The banks that survived the sector’s reform were installing new core banking applications to either speed up their processes or replace a failed install. The ecosystem was chaotic because there weren’t so many skilled hands in the industry, at that time.
Before founding CWG, Austin was first a salesperson at Inlaks Computers. There, he sold the first core banking application in Nigeria. He narrates his foray into the core banking software space:
“I was working with Inlaks computers, and there’s a gentleman that came and said to a stand, they were starting a bank called Ecobank, the same Ecobank. He was leaving Citibank and they had software called Globus. He wanted to use it at Ecobank. But, there wasn’t a local implementation partner. So, we became a partner to Globus and our anchor customer was Ecobank”
That experience prepared him for what to look for in a core banking application, implementation challenges and the peculiar needs of the Nigerian banking environment.
With a deep knowledge of the ecosystem, Austin and his team were equipped to enter the market.
Before Finacle
James wrote to a core banking software developer in Croatia. While his team had made progress on the deal, a bank in the country bought the company to acquire its banking software product.
“Because they didn’t want to take any chance, they brought the software developers in and started using their technology in-house. Hence, we could not resell their solution anymore despite all the progress that we had made”, Austin explained.
Consequently, his team had to look from Eastern Europe to Asia. And, they zoned in on a banking software called Bancs2000.
Approaching Infosys
The year was 1999 and Finacle (previously Bancs2000) was developed by an Indian software company, Infosys. By this time, Infosys has implemented the banking solution for some banks in India. Naming it Bancs2000 is in line with the trend of naming tech inventions after the 2000 millennium year (Y2K).
So, the CWG team wrote to Infosys for a potential partnership but did not receive a response.
Incidentally, the Infosys team decided to visit Nigeria in late 1999, in search of a new market. They had been discussing with some bigger tech distribution companies in Nigeria. CWG was founded about seven years before (1992) and may have been considered too young.
“We started in 1992. That makes us seven years old at that time. And, there were bigger companies in Nigeria which you may probably not be aware of today like data sciences etc. I think they set their eyes on these bigger companies”, he explained.
Perhaps the other companies did not meet some expectations, the Infosys team was on their way to the airport when they decided on a detour to CWG’s office in Surulere.
“We were at 20 Adelabu Street, Surulere. And, Jabez Mutlaya came in representing Infosys. They, obviously, did not want to return to India empty-handed. They asked us to show them our capacity and we demoed our PC banking and telephone banking system, XpertHR. And, they were very impressed that at least we understood the technology.”
After the meeting, the Infosys representatives invited the CWG team to India to conclude the partnership conversation. Afterwards, Austin Okere and James Agada visited the Infosys head office in India for a follow-up conversation.
“We went to India to meet their bosses and they listened. They liked our entrepreneurial spirit. But, they also did not want to take chances. So, we agreed on a partnership. But, they told us that the partnership will only become fully active when we bring our first customer”, Austin explained.
They agreed to the provisional agreement and left Infosys in February 2000 to look for their first customer.
Getting the first customer: Comet Bank
Luckily for Austin and his team, many banks were springing up in Nigeria during the early 2000s. The country had just ushered in a democratic dispensation under President Olusegun Obasanjo. And, the banking sector was undergoing tectonic reforms under a new governor, Professor Charles Soludo (we will get to the details later).
One of these was the Comet Bank (later renamed First Atlantic Bank, then FinBank). The Chief Executive Officer of Comet Bank at that time was Mr Femi Pedro (who later became the Deputy Governor of Lagos State under Governor Bola Tinubu).
At that time, Comet Bank was looking for banking software to make its process seamless. “They were in talks with a Jordanian software manufacturer called Basis. And, we went to them and said, why not try Financle?”, Austin said. The bank’s IT team was led by an ex-GT bank staff who had used the software at a previous workplace.
They refused CWG’s proposal as they were about to fly into Jordan to conclude the deal. But, Austin suggested that he could facilitate a detour in India for an onward meeting with the Infosys team as well. This way, they can have two choices. The bank’s leaders agreed. That was the clincher:
“They were to go to India to meet Infosys, then take a plane to Jordan and return to Nigeria. After, the visit to India, they didn’t go to Jordan again. This is because, during the trip at Infosys, they signed the agreement to implement Finacle”, he explained.
But, that was the beginning of a new challenge. The CWG and Comet team were under immense pressure because the failure rate for banking software installation was high, at that time. Two, Finacle was a new banking software in the market. Lastly, Comet is also a new bank.
“Remember, many core banking implementations failed during this period. So, everybody was waiting for us to fail. And, who is CWG Anyway?”, Austin remembered.
Eventually, the team delivered the project perfectly and on time. “We delivered and the bank was so happy. They went to town with the news and promoted the people who did the project with us. This was a big shine for them too.”
Delivering the best quality the first time changed the story for Austin, his team and Finacle in Nigeria.
Selling to Oceanic Bank
Shortly after the engagement with STB, Oceanic Bank came calling. Going by the 0% failure rate of Finacle at installation, they were considering adopting the solutions as the core banking application for their bank.
At that time, Oceanic Bank, led by Managing Director, Mrs Cecilia Ibru was growing very fast and in talks to buy an American core banking software called Phoenix, when Austin sold the prospects of Finacle to the team.
At the end of the presentation, Mrs Ibru instructed two executives of the banks- who were also her children- to visit the head offices of the software manufacturers. Mr Oboden Ibru visited India alongside Austin to check Infosys. Mr Obaro Ibru visited America with the distributors to check Phoenix.
When they returned to office, Oboden had the superior presentation and the MD, Mrs Ibru approved in favour of Finacle.
However, the unexpected success at Comet Bank, STB and Oceanic Bank became another challenge for Austin’s team and their partner. He explained:
“The problem was that Infosys wanted us to sign just one customer to become partners. And, here we had come with three in rapid succession. Completing the onboarding of one bank was enough trouble. So, we had to set up a support desk and so on. But. they were very patient with us. They took all our people to India. They trained us as if we were their people. And we were very enthusiastic to learn.”
Selling in Quick succession: STB
Following the Shine with Comet Bank, Austin received a call from Standard Trust Bank (STB). STB was founded in 1997 and has Mr Tony Elumelu as the Chief Executive Officer.
At that time, Standard Trust Bank was in advanced talks with some young people to develop software for them locally. They were having their board retreat at Ogere. Because they had heard of the success at Comet Bank, they asked the CWG team to come and make a presentation too.
“We went to Ogere at 9 am and they told us to be on standby in our rooms. But, they called us in at about quarter to midnight. We couldn’t sleep because we were anxious not to miss out. At the end of our presentation, they were very impressed. We invited them to come to India. We told them that what they had seen was just the tip of the iceberg”, Austin explained.
Austin believed that once they went to India, they would be sold. And that’s precisely what happened. “When Tony visited the Infosys office in India, he was so impressed, he was willing to commit to the execution”, he explained.
Signing FCMB
Another significant landmark in the Financle story is the signing of the First City Monument Bank.
When the bank chairman, Otunba Subomi Balogun decided that the bank required core banking software, his son, Ladi visited the then CWG office at the Octagon building in Victoria Island, Lagos. He was eager to meet the team behind the software that replaced the globally renowned Flexcube at UBA. Austin invited him to a tour of the Infosys facility in India. And, they went to India together.
“I knew once he goes to India, he will be impressed. The Infosys team did their research and knew all the pain points. They wouldn’t put pricing in front until they are sure that you are satisfied”, he explained.
At the end of the tour, FCMB signed up Finacle. The implementation went well and everyone was happy: “The test was so successful and the implementation was seamless. I felt proud. Almost all the people involved in the implementation got promotions. I remember some of them and we are still friends today”, he recalled.
Selling Finacle to First Bank
Signing a big bank like Oceanic opened the pathway for many others. The other key players in the Nigerian banking industry were curious to know more about Computer Warehouse and the banking software that they were selling.
Shortly after, one of the leading banks, First Bank wanted to change their software. Before that, the bank was using Bankmaster, a UK banking software, Bankmaster was like the big boy of banking in those days.
Subsequently, First Bank invited Bankmaster and other banking software providers (Flexcube, Phoenix) to bid. Infosys was also invited. Austin had to find a unique winning formula:
“I realised that everyone was pitching to the IT team. But, I went to the ED of operations, Mr John Aboh to get his input on how the technology should work. Nobody would have thought about that. No other provider went to see him. But, he is going to be the end user of the software!”
At the pitch session, CWG could provide unique propositions built on the insights they had received from Mr Aboh. For instance, Austin shares:
“The people decided as part of their RFP that the bank will need six data centres: a main data centre and five backups for the other geopolitical regions in Nigeria. But, we only proposed one main and one backup. Then, we told them that your bank is big, but it’s not that big. ‘The National Bank of Punjab is about 20 times your size, and they have two data centres. So what are you doing with these data centers? How would you have data inconsistency and so on?”
That was a defining moment in the bidding process: “It was either we are in or we are out at this point”, Austin recalled. “And, once they saw the sense in what we were saying, it became clear that either the others did not know what they were saying or that they were not bold enough”, he added.
They were invited back. Afterwards, they went to India and signed the agreements.
And, the implementation process was seamless and epochal. First Bank went online with over 307 branches, with the pilot going live in a record time of six months. Dr. Evans Woherem, Executive Director IT & Resources, FBN, testified to the quality delivery:
“Building a world-class information technology infrastructure was the most critical link for the bank to succeed in all its ongoing initiatives. For a large bank like FBN, what mattered was technology superior and a functional solution, which could scale up and be the vehicle of growth to meet the emerging global challenges in the financial arena. We believe Finacle not only offers all that we are looking forward to but also the critical time to market advantage that is so important to us”
An unexpected upgrade: The merger of STB and UBA
In the twilight of 2005, the country waited with bated breath to know the result of the most challenging banking reform exercise ever to be undertaken in Nigeria and indeed in Africa: the consolidation of the highly segmented banking sector.
Upon his appointment as CBN Governor, Professor Charles Soludo was faced with the stark reality of 89 banks many of which were ‘small and unviable’. With about 3,330 branches cumulatively, many of these banks had a capital base of less than S10m, in contrast to South Korea with just about 8 banks and 4500 branches.
It was clear that the status quo was unsustainable, but no predecessor had summoned enough courage to carry out the change process that was required to save the industry from eventual collapse.
The apex bank set a new benchmark for banks in the country, including a N25 billion Naira capitalisation mark. The effort was extremely successful, albeit with some teething challenges. 25 banks worked at a furious pace to meet the CBN directive to reach a minimum capital base of N25bn by December 31, 2005.
The first group to announce a successful merger was UBA group; an amalgamation of the erstwhile United Bank for Africa, Standard Trust Bank and Continental Trust Bank.
The consolidation produced the largest financial services institution in sub-Saharan Africa at that time, with a balance sheet size above 400 billion naira (approx. US$3bn), over two million active customer accounts and over 425 retail distribution outlets across Nigeria, as well as presence in New York, Grand Cayman Island and Ghana.
The success of the UBA group merger helped to assuage many doubts and set the ball rolling for many subsequent mergers.
One of the most daunting challenges in the consolidation exercise was the issue of technology harmonization. With different banks, running a variety of software platforms coming together to form a larger single entity, integration posed the most serious challenge.
At this time, CWG and Infosys have had five years of leadership in the provision of banking software solutions based on the Finacle Universal banking system in Nigeria. Before then, the team at UBA had not considered Finacle as a suitable option because their bank was too big. “As far as the people in UBA were concerned, we were too small for their size”, Austin said. Hence, they used another core banking software, Flexcube.
However, during the process of the merger, Tony Elumelu was adamant that both Finacle (STB’s adopted banking software) and Flexcube (UBA’s adopted banking software) be given a chance.
“He didn’t fight, but he put the parameters down and said ‘These are the parameters to meet. Whoever meets it. I don’t care how big or small. We will go for them”, Austin recalled.
Consequently, the team ran a very rigorous screening process. And, Finacle came out as the preferred choice in the end: “I think that the Flexcube team was a bit complacent because of their position and we were better prepared”, Austin said. In the end, some top IT people left because they were used to using Flexcube.
Thus, CWG signed UBA to the Finacle family.
Following the consolidation exercise, Finacle sealed her leadership position in the banking software arena with seven banks signed on. These include First Bank and UBA, who together process almost 40% of all cheques in the country. Others include Oceanic Bank, FCMB, First Inland Bank, Spring Bank, and Kakawa Discount House.
Other experiences
Aside from the listed banks, CWG sold the Finacle Core banking software to other financial institutions. These include Broadbank, Kakawa Discount House, Mainstreet Bank, Globus Bank, FBNQuest and Assurance Bank.
CWG also signed up Keystone Bank although the implementation was truncated when the Central Bank of Nigeria suspended its board and the then Acting Governor, Mrs Sarah Alade suspended all pending contracts.
Another company that had already signed up for Finacle was Nova Bank. Later, the bank indicated that they had found another much cheaper software. Two years later, they came back to adopt Finacle.
Success factors
For Austin, the success of CWG and Finacle in the Nigerian market is owing to 5 factors:
- Understanding that local support is a crucial ingredient for success. CWG set up 24X7 support centres in each discipline; hardware, software and communications, as well as a global standard Training Centre to impart knowledge to customers. This made the banks’ internal IT team become a reliable first support point.
- While many IT companies in Nigeria offer similar services, few vendors have acquired the required credentials to deliver integrated value-added, solutions that conform to global standards. This is where the Computer Warehouse Group differentiates itself.
- CWG has a well-rounded agency for information technology services deployment. The Group comprises three subsidiary companies in the three information technology disciplines as follows: Computer Warehouse Limited (hardware), ExpertEdge Software and Systems Limited (software) and DCC Satellite & Networks Limited (communications).
- Infosys had only one partner. So, there is no needless rivalry between local players.
- Infosys made sure that there wasn’t any distinction between the quality of Infosys personnel and CWG staff. This ensured a consistent quality delivery even in challenging times. For example, during the Ebola disease outbreak, CWG could support its local customers while expatriates couldn’t enter the country.