Factors influencing implementation of core banking system projects by commercial banks in Kenya: the case of NIC bank Kenya limited

Abstract

The objective of this study was to establish the factors influencing successful implementation of core banking system. The specific objectives of the study were; to determine the influence of human resource management on the implementation of core banking systems by commercial banks in Kenya, to establish the influence of project scope on implementation of the core banking system by commercial banks in Kenya, to establish how project risks management influence the implementation of core banking system by commercial banks in Kenya and to establish the influence of vendor selection on the implementation of core banking system by commercial banks in Kenya. This study used descriptive survey research design approach to address the questions raised in the document. The population for this study comprised of all staff from departments of the bank who were charged with core banking system development and implementation. For the purpose of this study, 45 staff were interviewed. The researcher used primary data. The study concluded that human resource management greatly influences core banking system implementation as indicated by 82.2% of the respondents. This is mostly influenced by availability of adequate resources and tools to support the project. The study concluded that project scope management influences successful implementation of the core banking system to a very great extent as indicated by 82.1% of the respondents through the organization maintaining records of all scope changes during the project and communicating changes to those authorized by management, involvement of business experts, involvement of technical experts and the vendor understanding and defining the user requirement. Ease of integration of the system being implemented, problem definition, project scope assumptions and constraints also play a great role in the implementation of a core banking system as indicated by 91.2% of the respondents. The study also concluded that risk management influences core banking system implementation to a great extent as indicated by 91%of the respondents. The areas that influenced core banking implementation were product delivery risk analysis, strategic risk, ensuring that risk mitigation were in place, resources risk analysis and risk and issue identification, business risk analysis, operational risk analysis , process and controls risk analysis, risk assessment procedure and process and controls risk analysis, ICT Risk analysis and accounting risk analysis. The study established that liquidity/ market risk/ profitability risk analysis, legal, regulatory and taxation compliance risk analysis were important factors on risk management influence core banking system implementation. The study concludes that vendor selection positively influence core banking system implementation in Kenya to a great extent and project implementation methodology, project management staff skills and system support mechanisms were the factors that most affected vendor selection. The study recommends that top management should provide the necessary support by ensuring that the necessary resources are availed for successful implementation, human resources department should ensure that necessary training is carried out prior to project implementation and the risk and compliance department of the organization needs to be involved in order to ensure that there are proper risk control measures in place.