Shared ICT infrastructure services key for financial industry growth - BoU official

Thursday March 7, 2019
Shared ICT infrastructure services key for financial industry growth - BoU official

BoU’s Dr Twinemanzi Tumubweine speaks at the first Oracle-Raxio executive roundtable 

Dr Tumubweine Twinemanzi, the Executive Director Supervision, at Bank of Uganda, has challenged the financial services sector to adopt a shared technology services delivery model, thereby cutting down the cost of doing business and pass on those benefits to customers in form of reduced cost of lending.
Mr Twinemanzi, was speaking at Serena Kampala Hotel during the first executive roundtable for business and ICT leaders as well as regulators to discuss how enterprises can manage operational costs by leveraging cloud technologies.
During the event Mr Twinemanzi singled out Raxio, one of the organisers of the event, for its Namanve data centre.
“What Raxio is trying to do (shared services) is something that is dear to my heart; something that we have been trying to do in the financial services sector. Financial institutions should focus on their core business which is intermediation- mobilising deposits and extending credit.
“Commercial banks and for that matter financial institutions are not the best at running networks or managing data. Let us leave that to the experts; let’s go back to the economics of division of labour,” Mr Twinemanzi said.
“We have reached a stage where financial institutions or financial services should compete based on the quality of services and the appropriateness of their products and not on how beautiful or how brandy-new their infrastructure or systems are,” Mr Twinemanzi, added:
The financial services industry in Uganda has over the last 10 years seen average cost to income rations rise to 74.6%, compared to 66.7% in the 10 years to 2008. As a result, average lending rates increased to a 10 year average of 22.16% from 20.39% in the same period.
Mr Twinemanzi challenged Raxio and Oracle to explore especially introducing shared software as a service- not just for Oracle but also for other software solutions, such as accounting, core banking solutions and credit analysis modules.
“The idea of software as a service is overdue,” he said.
Speaking at the event, Joachim Steuerwald, the Oracle Cloud Platform Sales Director, said with increased reliability on digital mobile solutions for virtually everything, it was it was mission critical that service providers invest significantly in reliable systems.
“We are increasingly becoming a digital economy. Customers can’t event tolerate our digital services being down for even an hour- it is just not acceptable. This requires the ICT behind those businesses to be available- 24/365. Building these highly reliable systems requires that we have the right environment,” he said.
“Many of the data centres in the region are fairly old. Before Raxio decided to enter the market, we did not have any single Tier III data centre in the region and that has been a significant constraint to achieve the kind of uptimes that a digital economy demands and that is why we’re interested in a partnership with Raxio,” further said Steuerwald.
Steuerwald said that while cloud services, have been around for sometime, adoption in East Africa like in many other African countries in Africa has been slow, partly because of lack of an African data centre footprint which made cloud services expensive but also due to data security concerns, especially by governments, which is why Oracle is fronting the idea of localised cloud services.
“This is why we thought of bringing an alternative, which we call Cloud at Customer, that basically offers the same cloud technology, but brought closer to the customer in a regional data centre such as being developed by Raxio or into the customers’ owned data centre as a viable alternative,” he said adding:
However, one of the things that make it hard for shared services to grow, is the regulatory environment in the country, something Mr Twinemanzi reassured banks on.
“From a regulatory point of view, BoU is beginning to have an internal conversation on coming up with an official position on the whole idea of cloud computing; do we allow it, under what circumstances, who can and who cannot? What can they do and what data can they store there- at least as regards financial data,” he said adding: “I think if we take the lead as the financial services sector regulator, it will be a question of time before other regulators come on board.”
Cost-cutting with cloud services
A 2017/2018 survey amongst government ministries, departments and agencies (MDAs) by National Information Technology Authority (NITA) showed that while a majority of MDAs agreed that cloud services had significant benefits such as reduction in ICT related costs (86.4%), simplicity of deployment (77.3%), increased productivity and flexibility in up-or down-scaling, only 28.6% of the MDAs reported using cloud computing services. Most MDAs (80.5%) reported that they host their applications and databases in-house.

The risk of a security breach emerged as the biggest barrier, followed by the high cost of cloud computing services and uncertainty about the location of hosted data.
James Byaruhanga, the Raxio General Manager however said that with shared infrastructure and software solutions, the kind that will be ushered in by a Raxio-Oracle partnership most stakeholder fears will be addressed.
“Shared cloud services hosted in a local data centre basically provide enterprises with a scalable model, tailored to your existing computing needs on a pay as you grow basis,” said Byaruhanga, adding: “What we want to give you is secure shared connectivity with multiple connectivity points that will position your business to look at the future. We will give you a more efficient and differentiating service that will make your business stand out. The whole idea about shared infrastructure is to reduce the cost of cost of ownership, reduce operational expenses, allowing you to be more efficient and provide a better service to customers.”