The use of ICT in leveraging basel II implementation in Kenyan banks
Date
2013
Authors
Sego, Rahab Jepkorir
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
Basel II is the second of the Basel Accords which are recommendations on banking laws and
regulations issued by the Basel Committee on Banking Supervision. The implementation of the
Basel II framework in Kenyan banks is moving at a very slow pace. This has undeniably,
affected the efforts of the banks to comply to international best practices standards. The major
reason is the lack of development of proper systems/frameworks for realising Basel II objectives.
The project analysed 45 professionals through use of a questionnaire, data recording and direct
interviews. Data was presented through the use of charts and tables. The data touched on the
respondent profile, employee experience, department and configuration of ICT to handle Basel
II.
This thesis examines the use of an ICT framework in the implementation of the Basel II in
Kenyan Banks. The aim is to assess the critical ICT challenges experienced in the
implementation. of Basel II, the current ICT implementation in place and propose an ICT
framework that can leverage Basel II implementation in Kenyan banks.
The study finds that the major challenges comprise the inability to provide consistent and correct
data over time as this data is obtained from different IT systems and data owners, non-automation/
partial automation of some processes, lack of comprehensive historical data and
inadequately trained human resource. Therefore, Kenyan banks will require technical assistance
in order to effectively implement Basel II and consequently comply with the international
banking regulatory standards of best practices.
The analysis of the feedback research from the research reveals that there is need for
development of clear guidelines, techniques and framework which ensures ICT enables Basel II
implementation in Kenyan banks. The thesis recommends a guideline ICT framework that will
leverage on Basel II implementation in Kenyan banks.
This project proposes that a solution can be achieved by the use of ICT framework that supports the requirements of Pillar 1, facilitates compliance of Pillar 2 and supports the comprehensive reporting requirements of Pillar 3. Basel II provides for basic, standard and
advanced approaches, with specific incremental capital adequacy, qualitative and quantitative
requirements. IT is most relevant to the quantitative and qualitative requirements, which are risk
management, control and governance practices.
Description
A thesis submitted in Partial fulfillment
for the award of a Master of Science Degree in Information Technology (Systems
Security and Audit)
Keywords
ICT, Banking, Kenya, Basel II