Ethiopia's CBO, IBM partner to advance digital transformation

Ethiopia's CBO, IBM partner to advance digital transformation

The bank's customer service was inadequate and faced a lot of downtime.

Multinational technology company, IBM will help facilitate digital transformation at Ethiopia's Cooperative Bank of Oromia (CBO) by transforming its core banking, middleware and database infrastructure.

According to a statement from IBM, CBO's infrastructure was not agile or adaptive enough to support digital transformation or accommodate their rapidly growing customer portfolio.

"The bank introduced a new core banking solution and chose IBM Power Systems to assist the bank in integrating various services to provide a single view for the bank and to enable clients to interact seamlessly," notes IBM.

Aman Semir, Vice President of Information Systems at CBO said, "With the previous legacy system and application server, the bank's customer service was inadequate and faced a lot of downtime."

The bank, which began operations in 2005 and now claims to serve over 2.4 million customers, has increased its footprint across Ethiopia.

Earlier this month, the bank partnered with banking and finance software solutions company Temenos to integrate its universal core banking solution.

According to Temenos, "Banking has undergone a massive transformation and changed forever. The digital revolution has led to a disrupted marketplace with changing customer behaviour and expectations, emerging competitor types, and innovative technologies that are game-changing. This disruption is forcing banks to revisit their business models and the underlying technologies that drive their business."

A report by McKinsey & Company, Powering Inclusive Growth in Emerging Economies 2016, states that Ethiopia could experience a GDP increase of an estimated US$15 billion by 2025 through greater adoption of digital financial services.

The report notes that 80% of the country's population lives on rural smallholdings that can be 10km or more from the nearest bank branch or ATM, and just 22% of all adults have a formal financial account.

As noted in the Alliance for Financial Inclusion's 2016 Maya Declaration report, the National Bank of Ethiopia was preparing a national financial sector master plan that would encompass initiatives to achieve financial inclusion commitments under the Maya Declaration.

McKinsey says the widespread adoption and use of digital finance could increase the GDPs of all emerging economies by 6%, or a total of $3.7 trillion, by 2025. "This is the equivalent of adding to the world an economy the size of Germany, or one that's larger than all the economies of Africa. This additional GDP could create up to 95 million new jobs across all sectors of the economy."