Three private commercial banks - Awash, United and
Nib - have sidelined the new kid on the bloc, Zemen
Bank, from a consortium they have formed to start an
integrated multi-channel banking system. They claim
that including Zemen Bank would put them at a
serious disadvantage, knowledgeable sources
The three banks signed a memorandum of understanding
(MoU) last Thursday, February 19, 2009, at
Intercontinental Hotel to work on an integrated
electronic banking system after having informed
Zemen the previous night that it had been excluded
from the business partnership, the sources said.
"It is a sad decision that we have to go our own
separate ways," Ermyas Amelga, chief executive
officer (CEO) of the single branch Zemen Bank, told
Fortune, declining to comment further.
After more than two months of negotiations involving
Awash, United, Nib and Zemen, the four banks
initially agreed to sign the MoU on February 11,
2009. They later postponed it to last Wednesday.
Their discussion on Tuesday night as to whether or
not to embrace Zemen into their fold, that has a
combined branch network of over 137 that would put
all banks on an equal footing, culminated in the
decision to exclude the new bank from the initial
step to start an integrated system. The system
includes a card payment system using a single
But the signatories say the signing of the MoU was
transferred to Thursday because Leikun Brehanu,
president of Awash International Bank, was out of
Though surprised by its sudden drop from the
consortium, Zemen is likely to start its own similar
banking system months ahead of its sideliners.
"We will start the multi-channel banking system in
about six to eight weeks," Ermyas told Fortune.
With a preliminary estimated cost of 40 million Br,
the three banks will install over 140 Automated
Teller Machines (ATMs) and more than 340 points of
sale (POSs) across the country in about six months
time. When the integrated system goes operational,
customers with payment cards from any of the banks
can make transactions from any of these facilities.
For instance, an account holder at any of the banks
can withdraw cash from any of the integrated ATMs,
regardless of which bank owns the particular vending
That actually is the core point that made the three
banks wary of including Zemen, sources said. With
Zemen Bank having a single branch in Addis Abeba,
and the three banks running theirs across the
country, the former would be in an advantageous
position to be accessed by a large number of service
seekers sourcing from the three banks, but very
distant from Zemen, the latter argues.
But the explanation given by the consultant firm in
the integration process, eVentive LLC, a management
consultant company headquartered in Chicago,
Illinois, is different while Awash and Nib say that
Zemen was not officially part of the deal right from
"Based on the business model each bank applies and
their current status in developing the multi-channel
banking system, it would be fair for both parties if
both Zemen and the consortium go their own ways,"
Yemiru Chanyalew, CEO and founder of eVentive, told
The kind of customers Zemen and the other banks have
is also another point considered in the process. The
amount of deposit Zemen and the other banks require
for a customer to open an account is also different.
The five Birr minimum deposit required to open an
account at Awash, for instance, jumps up to 25,000
Br at Zemen; this policy won the new bank a name as
an elitist bank.
Nevertheless, the presidents of Nib and Awash have a
"The consultant might have contacted Zemen," Amerga
Kassa, president of Nib International Bank, told
Fortune. "But it was only the three of us who
have been discussing the integration."
Neither does Awash International Bank agree that
Zemen was excluded because it is in a highly
"Since we came to the consortium, Zemen has not been
part of the discussion," Leikun, president of Awash,
told Fortune, also indicating that his bank
joined the group late.
But these claims are strongly contested by managers
at Zemen Bank.
"The consortium is something we had supported from
the inception," Ermyas said in a press release Zemen
Bank sent Fortune last Friday. "As a one
branch bank strategy, our pace to build our customer
touch point channels is a lot more aggressive and it
is best for us to integrate and join the consortium
once they are operational."
Yemiru supports his claim.
"eVentive has initiated the concept of integrating
the banks' card payment system," Yemiru told
Fortune. "Zemen was the first to accept the idea
followed by Nib and United."
Last year, Zemen Bank entered into an agreement with
eVentive for the procurement and installation of its
IT system, and Harland Financial Solutions for the
provision of Credit and Risk Management System
eVentive is a consulting firm exclusively focused on
optimizing its clients' front office people by
deploying and operating the Customer Relations
Management (CRM) system. In partnership with United
Systems Integrators (USI), it formed Offshoring 2.0
Technology Services Plc two years ago, with an
initial capital of 20 million Br. Offshoring, which
has opened the first software outsourcing facility
in Addis Abeba, is 80pc owned by eVentive.
With its multi-channel banking services expected to
start in weeks, Zemen claims it will provide a range
of remote banking services, including ATMs, internet
and telephone banking. These facilities enable
clients to conduct transactions from their home,
office, business premises, or other preferred
locations without physically going to the bank.
Under the guidance of this technology company, the
three banks will install their multi-channel banking
system, which they branded Fettan ATM, to provide
services to their combined 1.1 million customers.
The three banks have already installed the
infrastructure - core banking systems - to start
card based payment system, according to Yemiru.
The ATMs to be installed will be branded under the
respective names of the banks in the consortium, but
will have a personalization engine to identify which
bank the customer making the transaction on them is
from. Whenever a customer inserts the card in to a
'Y' Bank branded ATM, the personalization engine
displays a message that reads "Welcome to 'X' Bank",
referring to the customer's own bank, according to
The three banks are, however, pioneered by Dashen
Bank, one of the few earliest private commercial
banks in Ethiopia, in starting the payment system,
which it still dominates alone. Though the
state-owned Commercial Bank of Ethiopia (CBE) was
the second to initiate the technology and install
ATMs in some areas, Wegagen Bank, another early
private bank, has ensured that it is one step ahead
of the giant CBE as it has been working on
introducing the technology.
As the CBE continues to move at a snail's pace in
its turnkey solution for Card Based Payment System,
Wegagen Bank, on December 30, 2008, signed an
agreement with Technology Associates (TA), a Kenyan
based IT firm, through its local partner, Oratech
Consulting, an Ethiopian technology company which is
also partner to the US based Oracle, for the
development of the solutions for the payment system
and installation of a network of ATMs.
However, Dashen remains so far the sole player in
the field of electronic banking since 2006. In the
last Ethiopian fiscal year, Dashen generated close
to 31 million dollars through its partnership with
VISA, a little over a quarter of what the country
earned from the export of flowers during the same
Established a little over a decade ago, with an
initial capital of 50 million Br, Dashen Bank has
achieved remarkable advances in its application of
technology. Deploying close to 40 ATMs, the bank
provides its clients with access to many of its 47
branches and four foreign exchange bureaus,
including Awassa, Adama (Nazareth), Bahir Dar and
Dashen, a bank worth less than 10pc of CBE's
capital, leads the industry in terms of harnessing
this advanced banking system. This manoeuvre on the
technological front enabled it to effectively snatch
the pioneering role the CBE had maintained for over
half a century, beginning in 1942.