Banks in the country spend some $16 million annually as licensing fees for the core banking applications used to process transactions, Nigeria CommunicationsWeek can now reveal.
Core banking application is so called because it supports bank’s operations and basically means that the entire bank’s branches access applications from centralized datacenters. This means that the deposits made are reflected immediately on the bank’s servers and the customer can withdraw the deposited money from any of the bank’s branches throughout the country.
These applications are sourced outside the country as a result of certification issues which guarantee efficacy of the applications.
Nigeria CommunicationsWeek investigations revealed that the licensing fees are paid annually which represent between 15% and 22% of the cost of the initial deployment of such application. It also varies by the number of a bank’s branches.
It was gathered the six big banks with branches from 350 upwards such as, United Bank for Africa, First Bank, Union Bank, Intercontinental Bank and Oceanic Bank, which secured their core banking application at the cost of $8 million each pay annual licensing fee of $1.2 million and $1.5 million.
The second category of banks with branches between 150 and 350 get their software at the cost of $4 million. They include Guarantee Trust Bank, Bank PHB, Diamond Bank, Skye Bank, Unity Bank, Access Bank, Fidelity Bank, FCMB and Afribank. This category pays $600,000 licensing fee each for their application amounting to $6 million.
The last category whose software comes at the cost of $1million and above pays licensing of $300,000. The banks are Equatorial Trust Bank, Finbank, Stanbic IBTC, Standard Chartered, Citi Group, Spring Bank, Wema Bank and Sterling Bank
National Office for Technology Acquisition Programme (Notap), had in a report said that the country pays over $1billion from its foreign exchange as licensing fees for foreign software being used by organizations in the country.
This revelation has generated concerns with local software developers questioning the essence of wasting hard earned foreign exchange of the country in funding licensing fee where they are capable of developing such software in the country.
However, banks have argued that none of the locally developed software can perform critical function like online transactions even as they have not attained the required certification level of Capacity Maturity Module (CMM) level 5.
Nigeria CommuncationsWeeks had exclusively reported that local software developers require about $400,000 to attain such certification outside other requirements. This cost has been the major drawback for local software developers to get the much needed international certification which is the test for their product performing critical functions.