Leaders of microfinance banks (MFBs) in Nigeria are facing questions about their IT strategy. They need a plan defining what their MFB needs to do to serve a changing client base in a market quickly evolving with technology. Digital financial services, agent banking, and e-payments are fundamentally changing the financial services industry. According to Central Bank of Nigeria (CBN) statistics, the value of e-payment transactions rose by 32.5% between 2016 and 2017.
While there are countless different apps and digital financial services to consider, the objective of your IT strategy is clear and straight forward. Your IT strategy must enable your MFB to deliver on your business goals — growth, sustainability, profitability, impact.
Building cloud technology into your IT strategy
According to an article published by Forbes, nearly 80% of enterprise information technology (IT) will move to the cloud by the year 2025, leaving their on-premise systems behind. This prediction includes financial institutions and financial service providers around the world including commercial banks, rural banks, microfinance banks and institutions and financing NGOs.
“Organisations that do not have a high-level cloud strategy driven by their business strategy will significantly increase their risk of failure and wasted investment.”David Cearley, Vice President and Gartner Fellow
Cloud-based technology or ‘the cloud’ delivers well-documented business benefits. When a business or organisation replaces its dated, on-premise IT system with a modern cloud-based platform, they benefit in three key ways according to IBM: flexibility, efficiency and strategic value. For microfinance banks, the value of cloud technology can lead to:
- Becoming more efficient
- Making informed decisions
- Growing and reaching more clients
Your microfinance bank benefits from cloud technology both in the short and long term. The benefits are especially significant for growing institutions. However, as a leader of a microfinance bank, you must also consider the risks your IT strategy poses.
Addressing common concerns about cloud technology
Though there are risks connected to relying on cloud-based services, you can manage these risks. According to the USAID procurement guidelines for financial institutions, one of the most effective ways to mitigate the risks is through a “systematic and thoughtful approach to qualifying and selecting cloud service partners, combined with careful attention to service level agreements”.
“Cloud computing represents one of the most misunderstood, yet valuable, innovations in current IT and business strategies.”Daryl Plummer, Vice President and Gartner Fellow
To mitigate your risks, you need to consider your financial institution’s operating environment: secure data storage, a protected network, and a secure community cloud-based core banking system.
Your financial institution’s security is Oradian’s priority. Security is designed into the design and architecture of our cloud-based core banking system, Instafin. Oradian’s security governance enables financial institutions to operate continuously and comply with regulations in Nigeria, while maintaining the lowest possible security risk.