The stakes for successful consolidation in the banking sector was further increased last week when Microsoft advised that merging banks should be thinking of migrating completely from their existing software if they are to maximize the value of IT in their operations in the post consolidation era.

Sadun Anik, Microsoft's Industry Manager, Financial Sector, gave the advise in Lagos last week in an interactive session with journalists at the Lagos Business School.

Anik's position is at variance with the widely held belief in the banking industry in Nigeria that merging banks can integrate their various systems at a cheaper cost and still deliver services to their customers efficiently.

Anik told Finance and IT corespondents that the best option for merging banks in the country, especially when they run on different banking software, would be to migrate from their various packages into one formidable solution that can support their operations more efficiently.

Said he: "If a bank choose to keep four systems, they would keep maintaining four systems which would be pretty expensive. Banks can do this (only) on the short term."

Illustrating, Anik said: "Take the administration of loan for instance. The application process for loans are different from one bank to another and so also are the forms to be filled. In post consolidation banks, what this means is that customers would have to fill different forms in different branches of the same bank depending on the heritage of the branch where his/her account is domiciled. He contended that such loans might be difficult to administer.

Earlier, Anik had earlier told various CEOs who had gathered at the LBS for his lecture that for them to extract maximum value from their investment in ICT, the their organizations must be ready to undergo a whole culture change, not just IT change. He said that CEOs must be able to envision what their business need to run, and invest in new generation products that can help them achieve their objectives, stressing that they must not acquire IT just because they see others do so.

He further contended that even though there were certain elements of IT investments that are not measurable, there were certain features of IT investment which benefits are obvious. He cited the case of cheque clearing which could be done the next day with IT whereas it use to take 14 days without IT.

The breakfast meet was organised to educate CEOs on how to maximise Microsoft solutions to increase productivity in corporate organisations. Narrating his experience in the banking sector, Adefolu Majekodunmi, Enterprise Account Manager/Finance Services for Microsoft Nigeria, said that part of the concern of Nigerian banks in the pre-consolidation era is what they would do to their banking software. He however contended that beyond IT what they were really concerned about now is how to manage the culture change and human capital issues that would arise from consolidation.

Microsoft's role in all these, he explained, is spending time with the banks and their consultants to provide them with ideas on what they should be doing before and after consolidation.

He further explain that there were no qiuck answers to the issue of mergers and acquisition because each merger is unique on its own, stressing that the Nigerian situation is even made more complicated by the fact that banks are being forced to merge within one and half years.