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Premium Switch Solutions (PSS) is a consortium owned by six private banks: Awash International Bank, Nib International Bank, United Bank, Berhan International Bank, Addis International Bank, and Cooperative Bank of Oromia. It was established in 2009 by the visionary banks to save the high investment cost of the modern payment platform and deliver electronic payment services to financial institutions with a shared system. It commenced operation officially on July 5, 2012 with 165 million Birr. Now celebrating its 5th year anniversary, PSS is doing very well for itself and its member banks. Its ambition to bring in new technologies and to move forward the banking system in Ethiopia continues to grow strong. Capital spoke to Tsehaye Shiferaw, PSS Board Chairman and Awash Bank President, about PSS’ performance and its key to success during the last year.
Capital: Your performance when compared to the last four years is much better, what is the reason for that?
Tsehaye Shiferaw: The reason for establishing a premium switch solution share company was to foster working together even in competition. When it was established, there were a lot of challenges; it was not part of our work habit to have discussions among banks let alone work and use the same infrastructure. But we went through all that and now all the six banks established the PSS, we are now using a shared switch system.
The card system in Ethiopia is still very slow but now since we are working together in collaboration in card banking and because members of PSS have invested in installing ATMs and POS machines, the efficiency and effectiveness of PSS has been growing.
In the past years we were in a bad financial situation; this year the company amassed 10.2 million in profits. This shows that working together can also result in profits. So the main reason for having a good performance is the fact that we worked together.
Capital: What is PCI and exactly and what makes it different from other ATM service providers?
Tsehaye: PCIDSS certification means that a system is secured. It is a certification that is given from a security point of view. The certification is given after evaluation is done by independent foreign companies. Especially in card banking the major security measurement and criteria is PCIDSS certification.
PSS is the first in Ethiopia to have acquired this certification. The certificate is renewed annually; every year there is a check up if the system is secured or not and after meeting the criteria again, the certificate is renewed. If the system shows cyber security issues then you will not be given or have renewed certificate. Our certificate for this year has already been renewed, this can be a really good example for other banks in the country.
Capital: Here the ATM is usefully for only withdrawing money, but in other countries, customers can also deposit, is there a plan to bring such system here?
Tsehaye: For example, PSS members banks, besides providing withdrawing and depositing services, they can also send money via ATMs. If you are Awash Bank’s customer, you can go to an Awash Bank’s ATM and transfer money to anyone; if you are sending it to a person in Hawassa, you just tell them the code and they can go to any ATM in Hawassa and get the money.
We are also working on linking with mobile banking and, especially through Awash Bank, we are working towards enabling people to deposit money using ATMs, so people will not have to go to banks to deposit money. They can just feed it to the ATM, it will count it and credit it to their account.
Looking at the overall card banking system in Ethiopia, it is still in its infancy; it was started only a few years ago. Now, since we have the base infrastructure, we can introduce new technologies.
Capital: There is another new service being introduced which is taking out money from the ATM using mobile phones. How does that work exactly?
Tsehaye: It is what I was referring to earlier; it is connecting the ATMs with mobile banking. For example, if you want cash, you can send it from your phone to your ATM and then get the money using your ATM card. What we call digital banking: mobile, internet, ATM and so one need to be linked together in order to function to their full potential. That is what PSS is working on and we hope to bring in more new technologies and services.
Capital: Do you have plans to work on an ICT park? You were trying to establish your own center, how is that going?
Tsehaye: National Bank of Ethiopia gave PSS its business license and its main purpose is to serve member banks. In the future, in collaboration with the National Bank, we will increase PSS’ performance and be able to serve member banks on a higher level. If you look at the amount of hard currency spent on the IT department of each bank, you will find it to be a huge amount.
Locally if other companies such as PSS were established, we will have the opportunity to even do core banking within the country. Other countries are self dependent when it comes to such solutions and they have been able to earn hard currency by exporting these solutions. Look at Bangalore, India; it is an IT center, it is basically California. In the future that is what we hope will happen and the government also has set plans and strategies in this area. PSS as well as other banks, will work to grow the sector.
Capital: There is PSS with the six banks and then there is ET Switch, with the other banks in the country. Both provide the same service. Is this a benefit or a disadvantage?
Tsehaye: There are a lot of advantages for having both operations. This country has over 100 million people. If you look at the banking sector and the segment of the population that use banks, it is still very small, even in the Sub-Saharan region standards. There are 18 banks and to serve these banks, PSS and ET Switch play a huge role. PSS supports it shared vision with ET Switch It helps us serve banks efficiently and promotes the availability of choices. There are no negative aspects.
Our country is very big; there is a lot that needs to be done in terms of banking. We don’t just need these two companies, we will need more. ET Switch is a national Switch, we support their vision and we operate under them.
Capital: What plans and targets do you have for this year?
Tsehaye: Within the 6 banks, there is around 700,000 ATM cards, this is very small. If you look at just Awash bank, there are around 1.7 million accounts, this number is small. We want many more people to use card banking and we want to transfer to a cashless society; we want to facilitate increased digital utility. So that is what we want to work on. We also want to introduce new products and work to serve banks in a more efficient way. With our support, we want local banks to utilize Visa, MasterCard, UnionPay, and improve the country’s as well as their own hard currency earning.