Credit Bank plans to spend Sh100 million to upgrade its IT system, in anticipation of growing business after it opened its doors to the mass market.
The 24-year-old mid-sized lender, that until last month was focused on giving loans to a select group of companies and business people, says the overhaul of its core banking system is in line with its shift in strategy into retail baking.
"We launched our strategic business plan recently and one of the key pillars is the adoption of new technologies to aid product innovation and customer service improvement," said Nok Bwonditi, the chief executive, in Nakuru.
"We see this as the key driver for our business growth plan going forward and the shift in our strategy where the bank has fully embraced retail banking, deployment of a state-of the art technology is even a more urgent matter."
He noted that the bank had identified the vendor and would start procurement process soon.
"The new system will help Credit Bank enhance revenue streams, gain competitive advantage and deliver return on investment by enabling us to bring new products to market very quickly, both savings and loan," added Mr Bwonditi.
The bank reckons that its foray into retail banking needs a similar shift in technology.
With a new core banking system, Credit Bank will be joining Barclays Bank, KCB, CfC Stanbic, Equity Bank and Standard Chartered are among banks that have invested in similar systems that have become a crucial cost cutter since they are able to handle huge transaction volumes gains traction.
The bank which now has five branches has received approval from its board to open 11 more branches in the next three years while doubling its core capital as it seeks to build a war chest to aggressively grow its customers book, which currently stands at 5,000.
The shareholders will inject into the business an estimated Sh750 million to grow the bank's core capital base to Sh1.5 billion.
"It costs between Sh18 million and Sh22 million to put up a branch so we are talking of a huge capital investment cost which the board is willing support.
Through this expansion process we will be able to double our balance sheet and triple our branch network," he said.
The government, through CBK, announced in the 2009-2010 budget that banks should raise their core capital from Sh250 million to Sh1 billion by 2012.
Credit Bank currently has an asset base of Sh5 billion, total deposits of Sh3.5 billion and loans and advances of Sh2.5 billion.
The bank is also planning to have more road shows across the country in a bid to popularise it and is also considering investing in more ATM outlets and moving into agency banking - expected to fit within the Central Bank of Kenya's subtle push for agency banking.
The success of other lenders such as Equity Bank in the mass market has changed the face of Kenya's banking industry, with banks fighting it out to enlist more customers through branch opening drives.
With an eye on small and medium enterprises (SMEs), the bank is enhancing its services such as Letter of Credit (LCs), Trade Finance (TF), Guarantee Schemes and bid bonds.
For instance, the bank has partnered with ICICI Bank, one of the largest banks in India, enabling Kenyan importers to have easy trading terms through the use of LCs and TF.