eMerge on T24

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					eMerge on T24
An emerging sector

The microfinance industry has huge growth potential and there are real opportunities for those with
the right systems in place.

Microfinance is entering a new era. Small-scale community lending programmes are consolidating
and maturing into sophisticated financial operations. Established banks are recognising the value of
microfinance in extending their reach to new customers – an estimated billion of whom are currently
unbanked. In a climate of rapid change and increasing competition, the successful players have to
be forward-thinking and equipped with durable and agile technical solutions for any eventuality.

With experience of more than 10 years working in mass retail and micro-banking around the world,
Temenos is uniquely placed to anticipate the needs of the sector. Using this knowledge, and
dedicated investment, we have created a banking solution specifically for the microfinance sector -
eMerge on T24. eMerge is a set of programmes added to T24 to expand its functionality in
microfinance and SME lending. eMerge on T24 is a robust and scalable solution which allows
customers to start small, yet ready to grow exponentially as the business expands. To date,
Temenos has implemented eMerge on T24 for more than 60 clients – many with multiple sites – in
50 countries.

Consolidate or be consolidated

The microfinance sector is changing quickly. Smaller microfinance institutions (MFIs) are developing
from social lending programmes into sophisticated banking operations. Simultaneously, international
banks are recognising microfinance’s potential in their mainstream businesses – providing services
to largely unbanked communities, and ethical alternatives to investors. In this increasingly
competitive environment, larger players are swallowing up the smaller operations. The message is
clear - become one of the consolidators or be consolidated out of the market.

The challenge of growth
Regardless of whether growth occurs organically, as a result of consolidation, or through acquisition,
financial institutions must be ready to support their businesses as they expand and deepen. To gain
competitive advantage, these organisations must use technology effectively.

Temenos knows micro-banks need solutions that can grow as they increase their customer base.
Equally, they need a system capable of delivering new, tailored products to customers quickly,
through the channels that they want.

The drive for efficiency
In the past, smaller, community-based MFIs developed their own systems or used a combination of
portfolio tracking and accounting packages. The products developed for MFIs tended to be localised
and did not offer the functional and technical depth of a mainstream retail banking system. As MFIs
have grown, consolidated and evolved into banks, their systems have become unable to provide the
functionality or information that is required for their new business challenges.

Larger, new players in the sector also face some specific challenges. Most create subsidiaries or
special purpose vehicles to enter the market, and their legacy systems are not typically well-
equipped for the nature of microfinance lending – that is, high-volume, short-term and low-value
products, deployed in scenarios that differ from the mainstream financial industry.

The result is that many financial institutions in this sector continue to use tools which are manually
labour-intensive and not set up to deliver adequate management information.

Those willing to invest in excellent technical solutions can turn the current situation to their
advantage. Tools that improve operational efficiency and provide quality business intelligence give
financial institutions the best chance of survival.

Gaining control
The sector as a whole is becoming increasingly regulated. In addition to fulfilling the reporting
requirements of shareholders, micro-banks are required to comply with central bank regulations and
to the international regulatory framework in certain cases. There is a real need, generally, to improve
control and security to ensure proper steps are taken and clear audit trails are maintained.

Many MFIs do not have the procedural framework in place in order to comply with regulation. The
implementation of effective core banking software provides such a framework by increasing
transparency and so improving the quality of management of the business. This in turn encourages
more private investors to the sector.

Meeting requirements globally and locally
As MFIs consolidate and expand, their systems must accommodate various countries, cultures and
regulatory regimes. MFIs need a solution that can handle several languages and time zones on a
multi-entity basis, while also accommodating separate accounting standards for each branch,
business unit or country. They require systems with the capacity to be developed in order to support
requirements in the longer term.

A professional approach
Consumers in this sector are increasingly discerning. There is an opportunity for banks to gain
commercial advantage by demonstrating consistently high levels of customer service.

Staying ahead in a changing industry

Temenos is the leader in banking software solutions. Our world-class package, Temenos T24 is a
technically advanced, front-to-back core banking solution, used by over 600 financial institutions
around the world. Being fully scalable and parameterised, T24 can be configured to suit the needs of
any banking institution. Above all, as a released-based solution, it is constantly evolving, continually
enriched by T24’s global client base. The result is that the system’s growth is driven by some of the
largest, most progressive banks in their respective fields.

Through our experience of more than 60 microfinance implementations, we have developed eMerge
on T24, a ‘Model Bank’ which is adapted to the operational and processing requirements of financial
institutions in this sector. eMerge is a set of code and routines that is added to the core code of T24
while preserving T24’s core features such as straight through processing and real time reporting.

eMerge on T24 offers full banking functionality on an open, modern system. It is a tight retail model
with low implementation costs, which allows access to all of the developments that are fed back into
the T24 core system.

Broad functionality
eMerge on T24 has been specifically configured to perform most functions required by microfinance
institutions in an out-of-the-box solution.

The core system handles:
• Customer, product and parameter settings, including charges and fees
• Limits and collateral structure
• Information and reporting output
• Payment formatting and maintenance.

Additional facilities specially built for community banking are:
• Peer- or relationship-based lending methodologies
• Local reference fields for gender, age and district of residence, all of which are cross validated
  during the loan application process to ensure applicants meet the criteria of the product
• Exception-based payments and batch-payment processing
• Contract- and account-based lending
• Flat interest methodology
• A rich Customer Information File for individuals and other non-individual entities, such as groups,
  businesses or trusts
• Full suite of best practice standard portfolio reports
• Investor funds tracking to report on fund management
• Workflow processing and cash-flow reporting
• A product designer the bank can use to create new products
• Report and enquiry tools
• Comprehensive charges and interest set up
• Management of loans written off
• Potential customer status to store track enquiries and applications until they become customers
• Multi-language system and multi-company capability
• 24x7 processing and electronic delivery channels.

As banking requirements develop, additional T24 modules can be enabled, allowing the bank to
expand into new business lines, such as trade finance, wholesale banking, foreign exchange dealing
or any other specialised market segment.

Growing with the sector
Temenos systems are built for massive scalability. Designed to enable n-tier architecture, eMerge on
T24 allows clients to add servers according to how their business grows. eMerge can accommodate
unlimited accounts, customers and transactions.

The advantage of this is clear – microfinance institutions or banks entering the market can start
small, with the knowledge that they can expand at any time.

Beat competitors to the market
Temenos architecture gives banks the ability to create new products rapidly. Because eMerge on
T24 is configurable via parameters, financial institutions can customise new products internally and
deploy them instantly without the need for development or testing of new code. Not only is this
inexpensive, the ability to get products to market quickly translates to real competitive edge in a
rapidly changing sector.

A complete solution
With eMerge on T24, there is no need to invest in additional systems. It is a comprehensive front-to-
back processing solution featuring real-time connection between all parts of the system, spanning
transaction capture, verification, delivery, position management and risk control.

Integral to the solution is the visibility of the back end in all procedures. Workflow is automated with
straight-through-processing, although exceptions can be set. The connection of the front and back
end reduces the need for manual processes and minimises the risk of error.

Independent and future-proof
As an open standards solution, eMerge on T24 can be implemented on virtually any platform or
database. Although the product is soft configurable, it supports XML by default and can be connected
to standard industry middleware solutions if required.

Core functionality can be delivered via standard messaging to a variety of channels - branch, call
centre, telephone and internet banking. The inbuilt security management system regulates access

eMerge on T24 does not require a specific IT set up, nor does it tie the client to a single vendor. This
keeps the clients’ options open now and in the future.

Easy to implement, manage and use
Implementation of eMerge on T24 is straightforward. As the system is preconfigured, typical
implementation takes only 250 working days, spread over four or five months. In addition, users
require minimal training which reduces operational downtime. As such, eMerge on T24 is effective for
setting up a new operation quickly and ideal for rapid market entry.

With one technology and one environment to support, it is easy for the bank to maintain control over
its system. Clients are not dependent on Temenos’ resources for day-to-day running and

Focus on the customer
eMerge on T24 is customer-centric rather than product-centric. Customer information held within the
core system enables a bank to categorise its customers by a wide range of demographics for
segmentation, analysis and reporting. Users have a single view of customers, across all accounts
and incorporating all transactions. Bank representatives can access detailed, up-to-date information
when dealing with customers who, in turn, benefit from a more consistent and coherent service. It
also enables banks to cross-sell additional products to existing clients and to attract new business.

Global and local capabilities
Intermediary organisations and mainstream international banks entering the microfinance sector
need to set up and maintain operations in very different countries and jurisdictions, across several
time zones, allowing separate accounting standards for each office or country. Their challenge is to
meet local requirements while also having the ability to centralise and consolidate.

eMerge on T24 provides support for 24x7 global operations. It is an international solution that
operates across multiple jurisdictions and allows many countries and companies to be supported
from a single installation.

The solution offers:
• The ability for multiple companies to operate from the same installation while allowing
  independent close-of-business processing for each – it offers separate accounting standards for
  each office and each country
• Global consolidation of financial information – for example, by agent, branch, bank, region and
• A single installation of eMerge on T24, allowing all processing to be centralised
• Secure user access, meaning information can be shared and/or restricted across different
  departments, offices and country operations
• Full support for 24x7 global operations with a single, real-time view of information – this is
  important for networked institutions and banks running operations across different regulatory
  jurisdictions and times zones
• ASP and facilities management enabled, capable of spanning global business requirements for
  centralised processing and systems administration

The system is multi-language, currently available in English, French, Spanish and Portuguese, and
can be translated easily for local operators and customers. To date it has been translated into
languages as diverse as Vietnamese, Farsi and Russian.

Establishing best practice
With the challenge of regulation and the need to establish best practice, eMerge on T24 offers a
distinct advantage in its strong procedural framework and that is completely compliant.

Implementing eMerge on T24 can lay the foundation for good corporate governance and
transparency by fulfilling regulatory reporting requirements and maintaining a clear audit trail. The
product has benefited from our many years producing industry-leading software, with banking best
practice processes built into the standard routines and workflow.

eMerge on T24 is a business-ready solution. It is fully compliant with regulatory regimes, puts best
practice at the heart of operations and gives complete control over the business from day one.

Core functionality, with room to expand

eMerge on T24 offers broad functionality as     eMerge on T24 can support additional modules
standard. These modules are included:           either at installation, or in the future.

AC Account                                      Management information
AZ All in one account                           Process workflow
CO Collateral                                   Syndicated loans
DC Data capture                                 Money market
DE Delivery                                     Futures & options
EB Core                                         Securities
FT   Funds transfer                             Swaps
FX   Forex                                      Trade finance
IC   Interest and charges                       Confirmation matching
LD Loans and deposits                           ATM interface
LI   Limits                                     Reuters interface
LM Loans and money market                       Swift interface
OF Open financial server                        ARC CRM
OO Open interactive financial service           ARC internet banking
PD Past due                                     T-Risk
PM Position management
RE Reporting
ST   Standard tables
TT   Teller
jBASE Enterprise Edition

Further Temenos T24 eMerge options are avail-
able over and above the basic package.

IM   Image management
PC   Post closing accounting
MC   Multi-company
NR   Nostro reconciliation


TEMENOS eMerge is typically deployed in a distributed environment on a Windows NT Local Area
Network (LAN). As communications infrastructure improve, users are able to take advantage of TE-
MENOS eMerge's core capabilities and link branches through fixed lines or remote facilities.

Combinations of host based wide area networks, distributed data with report consolidation and Inter-
net batch file transfer and email enables networks of organisations to grow in an organic way around
their clients' requirements, wherever they may be located.

Grow with the market

Emerging retail markets differ from mature financial markets. Their profile, customer base and
challenges are different. Their technical solutions, too, must be different.

The microfinance market has huge growth potential. Competitive businesses will have systems that
take advantage of this. Solutions must be easy to implement and maintain. They must be able to
support volume growth, product and service diversification and status and organisational change.

eMerge on T24 is a proven system, designed to meet the unique needs of this market. It allows
participants to start small, but sets no realistic upper boundary. It offers rapid implementation and
open-ended functionality, in a constantly evolving, release-based solution. Above all, it can be
configured for new business as the organisation grows.

For these and many other reasons, over the course of the last decade, eMerge on T24 has been
selected by organisations looking to increase their capability in the increasingly competitive
microfinance sector.

                TEMENOS eMerge TM is a registered trademark of the TEMENOS GROUP and referred to as ’eMerge on T24’.   10
                    TEMENOS T24TM is a registered trademark of the TEMENOS GROUP and revered to as ‘T24’.

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