K-Rep Bank’s transformation from a microfinance lender to a commercial bank has received a boost with the upgrading of its IT system to enable it offer more mobile banking products and generate detailed transaction reports for retail customers.

The bank has spent an estimated Sh50 million on the upgrade from Microfinance and Community Banking system to TEMENOS T24 (T24) model bank system.

The bank joins other lenders such as KCB, Barclays, and CFC Stanbic that have announced upgrade of their information systems in the past three years. K-Rep’s management said the upgraded system will allow it to produce loan statements that will give customers updated re-payment records.

“It is like a total conversion. With the previous system the loans were contract based hence one could not get statement for a loan account. Now it is easier for a customer to understand as it operates like a current account,” said Albert Ruturi, the bank’s managing director.

The system will also support a more robust mobile banking, which has become a key competitive feature for retail focused lenders.

Most Kenyan banks have integrated customer accounts with their mobile phones and other phone-based transaction systems such as M-Pesa, Zap and Orange Money.

Pilot testing for the new system started in July last year and was complete after closing the 2011 financial year.

“The system is only considered to be fully installed when it is able to produce daily, end-month, quarterly and end-year statements,” said Jackson Machuhi, the general manager of Sofgen Africa who were contracted to install the system.

The upgraded system also integrates all K-Rep branches unlike the microfinance and community banking system which treated each branch as a separate entity.

This will increase customer service efficiency. K-Rep Bank returned to profit-making in 2010 following two years of loss-making.

It has been working on improving its efficiency levels to cut costs in the increasingly competitive Kenyan banking sector.
The management had in an earlier interview told the Business Daily that they were aiming to achieve a cost to income ratio of 60 per cent from a high 77 per cent.

K-Rep has over 421,000 customers. It is classified as a small-tier bank as per Central Bank of Kenya’s grading criteria.
Faced with a challenging environment and possible regulation of interest spreads, banks have turned to cost-cutting measures supported by robust information systems .