Technology transformation

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BREWER: some Islamic banks have started using Temenos' risk product, which we did not expect.

Nick Brewer, global strategy manager for core banking solution provider Temenos, tells ABF that the Middle East's banks are demanding new functionalities.

How have you developed your offering for Islamic banks?

If you look in the Middle Eastern markets, the banks tend to be fairly universal, so they offer some retail facilities, some wholesale banking facilities, trade finance facilities, property finance and that kind of thing, whereas some of the larger banks in South East Asia, where we've had some success recently, have a much more retail focus.

So they have a retail division that generates mass retail products for millions of customers and then the treasury division which does the treasury side of it, so organisationally, for balance of business, they would look more like a conventional western bank.

So that's beginning to change our focus slightly to look at things like product development capacities so that a bank can have more control over what banking products are rolled out, when they're rolled out, having a launch process, and when it retires them.

These are things we've had more in our conventional side of the system for some time than the Islamic.

Are Islamic banks using technology differently to conventional banks?

We have a product called T-Risk, a risk product, which we never originally saw as having a huge applicability to the Islamic banking market, principally because there wasn't a huge commercial record of sales there for anybody for that kind of system, but also because theoretically Islamic banks shouldn't really open up a huge amount of trading risk.

But, interestingly, for some of our larger clients we've seen quite a bit of interest recently with the T-Risk platform. It's too early to come out with signing stories and so on, but there's quite a lot of interesting credit risk management and things like currency risk management, so I think that will probably push us more in that way in the coming year as well.

You are developing an Islamic treasury solution with Al Salam Bank. How is the development progressing?

That continues. They have deployed quite a lot there. The discussions at the moment are about purely the front-office part of the treasury. The back end processing part is done and we are now focusing on the front office part of it.

It's an interesting change for us because we don't often do front office treasury, for Islamic banks or any kind of bank, so it's interesting to see us being pulled in that direction.

How is your core banking product, T24, set to develop?

We have a product which has 170 new enhancements every year, and they continue. There will be a couple of functionality announcements coming up later this year, but I don't want to cover them yet.

Our increasing support for Microsoft platforms is meeting some success in the market as well. We're still open platform, but Microsoft has been a recent addition to that, and that seems quite positively received as well.

How do mergers and acquisitions affect banks' core banking needs?

You get two things happening when you have mergers and acquisitions. Firstly, you get more business, more customers and more transactions, but one of the things that seems to be happening in the Middle East generally is that with the pattern, either of mergers and acquisitions or new openings, there are a lot of national banks in the process of turning themselves into regional banks.

This means they have to face the problem of having smaller overseas operation satellites or even acquisitions of equal size to themselves in another country.

Do any of your regional clients face any particular technology challenges?

If you look at some of our customers like Byblos Bank, based out of Lebanon, they now have operations in Syria, Sudan, and are looking to North Africa, and they have quite an interesting series of IT problems to face which come from that.

Our system is multi-entity but then for example if you open a bank in Syria you have to control quite carefully who has access outside of Syria to the data, under Syrian banking laws.

So I think that favours people like us who have a lot of experience in multi-entity and centralised hubs and global deployment kind of options. I think the consolidation in banks will cause consolidation in the package vendor market as well - a lot of the smaller players will fall away, as has happened elsewhere in the world in the past decade.

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