Capitec Bank, a leader in developing new products for underserved populations in the South African market, needs a lot of adaptability to pursue its goal of making it easier for its one million-plus customers to use the bank.

“The Capitec Bank business model in essence consists of a strong focus on providing low-cost banking services with the emphasis on unique product designs provided via the widest distribution possible,” said Riaan Stassen, CEO of the bank. “The model allows for lower technical demands on staff skills in a paperless environment, which is backed by the innovative use of technology, such as biometric controls and cameras.”

Capitec uses BANCS, a Windows-based scalable and robust banking platform from Financial Network Services (FNS) based in Sydney, Australia.

Automated workflows built into the BANCS solution for Capitec Bank use sophisticated identification capture and verification processes (biometrics) supporting multiple peripheral devices such as scanners, cameras, printers and card readers. The workflow design based on BANCS’ inbuilt component workflow tools enables entire business processes to be workflowed and automated.

“The bank’s business model is clearly bearing fruit and the new banking services announced today are proof of that,” added Stassen. “We see it as a revolution gathering momentum and we will continue to use innovation to expand our accessibility to the market and to drive costs as low as possible for our clients.”

Capitec has launched an Internet-based platform aimed at employers. It offers simplified access to information on a client’s bank account and the ability to transfer money between accounts. The platform is also equipped with a mechanism for the payment of wages and salaries by employers to employees. For employees whose only access to the Internet is at work, Capitec has begun offering factory floor-based kiosks that offer transactions such as balance information, ability to transfer funds between accounts and payment to third parties, extending the convenience of Internet banking to South Africans who don’t own computers. To encourage its customers to use debit cards, Capitec is installing card readers at retailers so customers can check their account balances and see what they can afford to buy. Coupled with a low transaction fee, this is expected to stimulate the use of bank cards across the country.

“This is a wonderful combination of modern technology and the key elements of client convenience which provide a banking service with a real difference,” said a senior executive at the bank.

The bank attributes its strong growth to client acquisition, aggressive product pricing and rapid expansion of its low cost branch network.

FNS, which is now part of Tata Consultancy Services (TCS), had traditionally sold its Windows systems in emerging financial markets across Asia, Africa, Eastern Europe and the Middle East. Running on a cost-effective Microsoft platform with Intel or AMD processors provides a competitive edge in those markets.  

Back in 2003, the company set out to test the scalability of the Windows platform for the full range of core banking. At the time, eight banks were using FNS on a Windows back end, so the company knew that its banking platform, called BANCS, was scalable and robust, said an FNS spokesperson.

“However, we wanted to quantify and validate that performance using rigorous and controlled conditions where the application and architecture could be pushed to their limits,” he said.

In early 2003 FNS loaded BANCS onto a 16-processor IBM xSeries 440 and Microsoft SQL Server 2000 database onto an 8-processor IBM xSeries 440. The company used Micro Focus Application Server to deploy the COBOL-based BANCS in the Windows environment. BANCS processed 811 transactions per second and achieved a peak load of 21 million accounts per hour. That is more than the four largest Australian banks combined are processing, said an FNS spokesperson, and with the latest hardware, that benchmark could be doubled or tripled.

Recently, the company’s success in high-performance core banking on the Microsoft platform has generated interest from large retail banks in North America and the UK as major banks look to replace aging systems.

“Mainframes and UNIX systems will be around for a great many years in the banking sector,” said a company spokesperson. “However, this benchmark study shows that a mission-critical banking application such as BANCS can be effectively implemented in a Windows server environment for considerably less than setting up a similar system on a mainframe or UNIX machine.” Banks can save thousands and even millions by using Windows servers rather than UNIX or mainframes, he added.

Moving to FNS on Windows also allows banks to offer innovative products and services, and deliver them with a speed that would be impossible using a mainframe-based core banking system.

Capitec has grown rapidly with BANCS, to more than one million accounts. Providing specializing lending, including micro loans through one-time ATM cards, it has an unusual metric – not transactions per second, but the time required to process an application to fund a loan. That’s currently 192 seconds and the bank wants to drive it down to 170 seconds.

Compare that to a large Toronto bank which promises a lending decision in three days and uses PDF and paper, said Glenn Stafford, vice president of retail banking at FNS. He tried it, and the bank called him at the end of three days as promised.

“So they kept to their SLAs (service level agreements) but their SLAs were pretty damn poor. I think customers want an answer in 10 minutes.”

When banks get there, FNS is ready with a fast and flexible Windows-based solution.

www.capitecbank.co.za

www.fns.com.au

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