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Transcript of Dashen Bank
Dashen Bank as an Information Infrastructure
First Deliverable: INF5210
Prepared by
Sofia Lulseged Abrha Seid Hussein Yimam
October 2005
Table of Contents
Table of Contents ....................................................................................................14 Chapter One: Introduction........................................................................................2
1.1 History .......................................................................................................... 2
1.2 Services offered by the Bank ....................................................................... 4
1.3 Technology used in the bank ....................................................................... 5
Chapter Two: Dashen Bank as an Information Infrastructure: emphasis on the FlexCube Software ................................................................................................... 8
2.1 What is an Information Infrastructure ........................................................... 8
2.2 It is evolving ................................................................................................. 8
2.3 It is shared.................................................................................................. 10
2.4 It is open..................................................................................................... 10
2.5 It is heterogeneous..................................................................................... 11
2.6 It is standardized ........................................................................................ 11
2.7 It is enabling ............................................................................................... 12
2.8 It is an installed base.................................................................................122
2.8 The Infrastructure: Evolutionary or Revolutionary?.......................................... 12
Chapter Three: Conclusions...................................................................................14 References ............................................................................................................... 15
1
Chapter One: Introduction
1.1 Introduction
This document discusses Information Infrastructure of one of the prominent private
banks in Ethiopia. It tries to discuss banking history in Ethiopia and the bank’s
history, services delivered and technology used briefly. Moreover, it discusses the
bank and its major software as an information infrastructure viewing the infrastructure
from the properties of information infrastructure. At the end, it gives conclusions
based on the discussion. References are also provided at the end.
As a source of information, we referred literature on information infrastructures, read
different publications and visited relevant websites, used the lecture classes and
group discussions, and drew from our own experience. We also conducted interview
with relevant personnel of the bank.
1.2 History
Modern banking in Ethiopia introduced in 1905. At the time, an agreement was
reached in between Emperor Minelik II and a representative of the British owned
National Bank of Egypt to open a bank which led to Bank of Abyssinia inaugurated in
Feb.16, 1906 by the Emperor.
In the 30’s the bank was bought by the Ethiopian government and the State Bank of
Ethiopia was established by a proclamation issued in august 1942. This bank was
later disintegrated to two different banks forming the National Bank of Ethiopia and
the Commercial Bank of Ethiopia.
Through times, more foreign and domestic banks were established. To name a few
Banco di Roma, Banco di Napoli, Banca Nazionale del lavoro and Agricultural Bank
were the prominent ones. The first private Ethiopian bank was Addis Ababa Bank
2
Share Company, was established on Ethiopians initiative and started operation in
1964 with a capital of 2 million in association with National and Grindlay Bank,
London which had 40 percent of the total share.
However, the banking business could not move further because of the
institutionalization of private investments by the Socialist regime that came into power
leaving only three government banks; the National Bank of Ethiopia, the Commercial
Bank of Ethiopia and agricultural and Industrial Development Bank.
This was reversed when the Socialist regime was overthrown in 1991 and the
issuance proclamation for the licensing and supervision of insurance business, which
led to the beginning of a new era. Immediately after the enactment of the
proclamation private insurance companies began to flourish, leading to nine private
banks operating in Ethiopia as of 2000.
Dashen Bank was established as per the intent of the new policy and the Ethiopian
investment code. It came into existence on September 20, 1995 according to the
Commercial Code of Ethiopia, 1960, and the Licensing and Supervision of Banking
Business Proclamation No. 84/1994.
The first founding members were 11 businessmen and professional that agreed to
combine their financial resources and expertise to form this new private bank. Since
then the Bank has been growing now having 34 branches all over the country.
As stated on the website of the company the mission of the bank is “to provide
efficient and customer focused domestic and international banking services,
overcoming the continuous challenges for excellence through the application of
appropriate technology”.
The bank has now 59 share holders, quarter million customers, 34 area banks, 1051
number of employees and it stood 2nd on the market share among other banks in the
country.
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The annual report of the bank states that by the year 2004 it has total revenue of 192
million birr and net profit of 56.3 million birr.
1.2 Services offered by the Bank
Currently, the bank renders four major services in all of its branches namely, Credit
Facility, Saving Scheme, International Banking, and Fund Transfer. Moreover, the
bank is providing the customers MasterCard and Visa cards so that they can use it
internationally.
The bank provides a credit facility to its customers in different forms depending on
their need and the nature of their business they are to invest on. Some of the credit
lines offered include; overdraft facilities, term loans, letter of credit facilities,
merchandise loans and personal loans.
The other service the bank renders is deposit services including demand deposit,
savings deposit, youth savings deposit and time/fixed deposit.
The bank also renders international banking services providing services like; opening
letters of credit for importers, handling of incoming LCs for exporters, purchase of
outward bills purchasing and selling of foreign currency denominated notes, receiving
and transferring foreign currency payment by swift and handling incoming and
outgoing international letters of guarantee.
Furthermore, the bank is currently offering fund transfer. The bank provides both
domestic fund transfer all over the country and international fund transfer, rendered in
cooperation with Western Union.
Dashen Bank has established account maintenance relationship with thirteen
correspondent Banks. Overall banking relationship in SWIFT has expanded to 109
banks in 55 cities and 44 countries.
4
1.3 Technology used in the bank
The bank uses various kinds of communication and computing technologies to carry
out its day to day activities. The communication technologies range from telephone
and fax to dial up internet connections and very fast high speed broadband network.
As to the interview with one of the bank employees, now the bank is under transition
of changing the old system with the new one for all branches. The change includes
replacement of old hardware with modern and competent one. All branches in the
capital started to work using the new system and other branches especially branches
in rural areas are under process (training users, preparing the necessary hardware
and equipment...).
Wide Area Network (WAN) is another attractive feature of the Bank's technology,
customers having a deposit account in one of the area banks can access their
accounts from any other area bank in the country.
Micro Banker is used as major bank software (UNIX sco version) starting from its
establishment 9 years before. The system is decentralized in a sense the servers are
distributed to the branches to support the service provision. Those branches are
connected by WAN through dial up connection. The software supports different
banking activities like customer registration, transaction processing, generating
reports to different departments and so on. Microbanker works only in a UNIX
environment obligating workstations to use only command lines and prohibiting them
to change between applications while using the software.
As the need for control and efficiency increases, the bank decides to change the
software to new banking software called Flexcube. This system enables the bank to
have competitive advantage and more control over the operations. ”This system will
not only allow the Bank improve its competitive edge but also make a difference by
ensuring further capacity as well as providing assured centralized control and
centralized database”(Bank President).
5
6
The new software has a lot more facilities and modules that the previous software
does not have. Though currently, the bank uses only some of the functionalities that
the banking software provides, it can use more functionalities in the future as more
and more services are introduced in the bank.
Figure 1 depicts the architecture of the software, in the picture it shows that the
software have functionalities for any kind of financial institution like banks, asset
management and brokerage.
The bank also uses different applications for performing different tasks. For instance,
Microsoft Excel and Access for payroll and human resource database respectively.
7
Internet
Teller
ATM
POS
Phone
Mobile Phone
PDA
ACH
Institutional Delivery
SWIFT
GIRO
CENTRAL BANK
REPORTING
ZENGIN
CLEARSTREAM/CEDEL
RATE FEEDS
Performance Mesearement
Business Analytics
Risk Management
Workflow Mgt Nostro Reconcilat. Fixed Assets Expense Processing
Signature Verifica. Funds Transfer Standing Instructi. Electronic Mesg. Syst.
COMMON FACILITIES
General Legder
Customer Information System
Management Information System
Risk Management Clearing
CORE MODULE
Investor services Cash & Liquidity Asset Managemnt Derivatives Securities
Bills & Letters of Credit Foreign Exchange Money Dealer
Curt. & Sav. Accts Deposits Loans Loan Recnci, proc Loan Syndction
FUNCTIONAL MODULES
Customer Ralationship
THE ARCHITECTURE OF FLEXCUBE
Figure 1. FlexCube Architecture
REVELEUS
Reveleus Avtive Portal
Reveleus Insight
Reveleus Mart Builder
Technology Solutions
FlexCube Internet Banking Suite
PORTAL
RETAIL
CORPORAT
INVESTOR
BROKER
3rd Party Interfaces
Reveleus Data Integrator
Other Systems
CRM Systems
Dealing S stems y
Chapter Two: Dashen Bank as an Information Infrastructure: emphasis on the FlexCube Software
2.1 What is an Information Infrastructure
According to Ole Hanseth, 2002 an information infrastructure is a shared, evolving,
open, standardized, and heterogeneous installed base.
Based on the above definition any system has to qualify the following criteria to be
regarded as an Information Infrastructure if:
• It is sharable: in a sense it has to be common resource to all users (of a
community)
• It is evolving: it should exhibit growth in terms of number of users,
technological improvement, diversification of services
• It is open: It should not have limit or boundary to number of users , or groups
• it is heterogeneous: The different users because it has no limit to group or
number of users, the different technological progress and the diversification of
service it supports makes it heterogeneous
• it is standardized: means there must be agreement between different users
about the arrangement of the infrastructure in order to be used by all users
2.2 It is evolving
Change in services
The bank is introducing new services to the user community. Services like ATM,
MasterCard and Visa cards are introduced to the user community this year.
Change in technology
The bank has changed its system from the previous computer system called
Microbanker which does not have a centralized database to a new one called
8
FlexCube which can enable centralized database processing as well as distributed
one.
This means all the branch banks will have their own database of users, which as well
be propagated to the central server of the bank. This helps the recovery of data
easier than that of the previous system. If the servers at the branches crash the data
can be reclaimed from the central database since the data from the branches is
synchronized with the central server.
The changes have not only affected the software part, but also the hardware that the
previous system used to use. This includes the change in computers and network
facilities.
The workstations at the service end have changed to meet the requirements of the
FlexCube client software. To this end, high speed computers with high memory and
hard disk capacity have been introduced.
Regarding the network, it has been changing over the time from dial-up to broadband
technology. As a result the components have changed from wired network solution to
wireless one using the UBR technology which can increase the bank’s bandwidth.
This has enabled the branches in the regional towns where the infrastructure is not at
the level of the one in the capital city benefit from the new improved network.
All the above cases of development in the technological part show that the
infrastructure is evolving over time.
Increase in number of users
The bank has been increasing the number of branches it has every year. The
branches are opened not only in the capital but also in regional towns where the
infrastructure is not at the level of the one available in the capital. This implies that
the increment in number of users in accordance with new branches.
9
2.3 It is shared
The infrastructure is shared by the community of the bank. Flexcube is used by clerks
to register users and for processing transactions, accountants for authorizing
registration of users, authorization of transactions and loan transaction processing,
bank managers to authorize loan and the daily transaction as well as reports, and IT
professionals for managing users of the system and providing technical support.
It is also used by top management for designing strategic plan. They also use it to
generate high level reports to base their decisions on. In the near future, the bank will
open ATM and web based banking services which will make the infrastructure to be
shared by the customers as well.
2.4 It is open
The infrastructure is open to more customers, new services, new type of employees
and new applications. This means the bank can have more and more customers in
the future and no part of the infrastructure prohibit the bank customer community to
increase.
At the same time the bank can establish new services along with the ones it is doing
now like brokerage services, asset management and international banking (which
FlexCube provides but not used by the bank). Along with the services, a room for
new kind of employees will open. These employees will perform the tasks that are
needed to render the new services to be offered.
The infrastructure is also open to new applications. For instance, the laws of the
country may obligate every bank in the country to use the social security database of
the government in the future if the country is to build one. The bank may also
exchange information with other banks which have different systems.
All the above characteristics of the infrastructure imply that the infrastructure is open.
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2.5 It is heterogeneous
There are different kinds of software in the bank for banking system, for payroll and
for money transfer.
Currently the bank is on transition stage transforming from Micobanker to Flexcube.
At this time, the bank is using both softwares in different branches. Microbanker
(which is the older) is used by most of the branches out of Addis Ababa. On the other
hand, FlexCube (the new software) is used in all branches in Addis, and some
branches out of Addis.
The bank uses spreadsheet software (Excel) to manage its payroll. There is also
software that the bank uses to give Western Union money transfer service. Along
with the software, different kinds of hardware are employed to support the services
rendered in the bank.
There is also a difference in the kinds of system users and customers. The kind of
system users range from IT supports staff to managers, clerks and accountants. The
users also range from individuals to private companies, government offices and
associations.
These above characteristics make the infrastructure heterogeneous.
2.6 It is standardized
The banking business has standards that upon which every transaction is made.
There are standards to send money from one bank to another, there are standards to
send money from one country to another, there are standards to send one branch of
the bank to another, there are standards on the screening mechanisms of users
(banking criminals and fraudulent people can not open an account or to get loans
11
throughout the other banks), there are standards on the use of forms all over the
bank. Dashen bank works on the standards set by
2.7 It is enabling
The banking service has room for new technologies. New systems can be integrated
to the infrastructure. In the case of the bank for example a new IT solution for
accomplish domestic fund transfer can be introduced.
New services can be established without the need of a very big investment in
Information Technology and related matters since the current information
infrastructure of the bank has already paved the way for new technological areas.
One example of the enabling feature of the infrastructure regarding new applications
is the installment of ACI technology over FlexCube in order to introduce the use of
MasterCard and Visa cards which is being implemented very recently.
2.8 It is an installed base
The previous system that the bank uses, Microbanker is a product of the same
company that produced the new software the bank has introduced. Flexcube is built
on the model that Microbanker is built and hence it was easy for the bank to integrate
the operation of the two systems easily.
Hence, the previous system of the bank is an installed base for the new one. The
new system can be an installed base for more change in the bank like introducing
new services that were not offered and the like.
12
2.9 The Infrastructure: Evolutionary or Revolutionary?
The new software solution (FlexCube) for instance evolved from the previous
software the bank uses (Microbanker) which ensures that the work is done in more or
less the same way as it was made in Microbanker apart from new and advanced
features FlexCube has. For instance, the bank is doing domestic fund transfer using
FlexCube which was previously done using phone lines. On the other hand, the new
system can help the bank to introduce services like phone banking and internet
banking. This can elaborate that the system is evolving and hence evolutionary.
13
Chapter Three: Conclusions
Conclusions
According to Hanseth (2000), an installed base is regarded as an infrastructure if it is
open, shared, standardized, heterogeneous and evolving. As we can see from the
discussion in the previous chapters, Dashen Bank fulfills all the requirements of an
Information Infrastructure in that:
• It is open to new services, customers, employees and applications
• It is shared by different kinds of users and customers
• It is a heterogeneous mixture of customers and personnel as well as
hardware, software and network components
• It is evolving in that there are changes in the bank and the banking solution
also evolving to meet the needs of the bank
• It is standardized, that the bank can perform tasks that are performed in any
other bank using the system
From these points we can conclude that Dashen Bank and the software solution the
bank is using can be regarded as Information Infrastructures.
14
References
1. Dashen Bank website. www.dashenbanksc.com
2. Hanseth, O. (2000). The Economics of Standards. In From Control to Drift, pages 56 – 70. Oxford University Press
3. Hanseth, O. From systems and tools to networks and infrastructures - from design to
cultivation. Towards a theory of ICT solutions and its design methodology implications.
http://heim.ifi.uio.no/~oleha/Publications/ib_ISR_3rd_resubm2.html
4. The History of Banking and other Financial Institutions in Ethiopia (2000?). National
Bank of Ethiopia. http://www.nbe.gov.et/History/history.htm.
5. iFlex Solutions website. The company that produced Microbanker and Flexcube.
http://www.iflexsolutions.com/iflex/home/default.aspx
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