African banks find it far easier to measure return on investment on new IT systems than their European counterparts do, because of the obvious improvement in customer service levels, writes Paul Vecchiatto of ItWeb.

This is according to Martin Whybrow, editor of UK-based publication International Banking Systems, who addressed the I-Flex Africa Bankers’ Strategic Leadership Meet in Cape Town today.

"Raising service levels is the easiest justification in a sector that is considered to have poor service levels," Whybrow said. "In Europe, most banks are competing in much the same space and their justification for installing new systems is far less. This means that African banks have a great opportunity to make a technological leap."

International Banking Systems recently completed a survey of technological trends among 675 European banks and Whybrow noted that the issues covered are similar to those that affect African banks.

He said legacy system suppliers had (with one or two honourable exceptions) failed to come up with new systems. "This has left core systems development in the hands of start-up companies ­ with mixed results."

As a result, legacy system suppliers tended to try to revamp their existing systems by adding components (Windows, Java or .Net) around the core. This leads to more complex environments that add resilience and support issues.

"Some of the banks and their suppliers are now reversing the trend, which means "repatriating’ functionality."

Whybrow said Java was being used by an increasingly large number of banks for in-house development of systems, with benefits being cross-platform functionality, security and ease of use. However, the downside was that the concept of plug-and-play Java components for banking had not been achieved and it was difficult to re-train people.

He said the case for .Net included Microsoft’s deep pockets and its determination to head off Java. It also created a fast development platform and had inherent XML and Web services support with a wide choice of applications.

Linux was gaining strong ground in the banking sector, particularly in the US and Asia Pacific regions where low cost of ownership was a major concern. Worries about stability were evaporating and while not used for core applications, some software suppliers were porting back-office systems to it. Whybrow said that instead of installing large monolithic systems, banks could access remotely hosted applications in areas such as credit scoring and anti-money laundering lists.