Choosing Core Banking Software for a Nigerian Non-Interest MFB: A Framework

If you are the MD, COO, or CTO of a Nigerian non-interest MFB shopping for a new core banking system, the market is confusing. Vendors will claim compliance with everything and show you polished demos designed to obscure the gaps. This guide gives you a framework for evaluating what actually matters — so you ask the right questions before you sign anything.

The fundamental question: is this core Islamic, or adapted?

Before any feature comparison, understand how the platform was built. There are two categories:

Category 1: Conventional core with Islamic modules BankOne, Flexcube, Temenos T24, and most regional vendors fall here. The core was engineered for interest-based banking. Islamic products are implemented as product wrappers — a Murabaha is a “loan” with a “markup field”, a Mudarabah pool is a “fixed deposit” with a “profit-sharing” label. The GL underneath still speaks conventional accounting. These systems create structural tension with Shariah compliance that you will be managing forever.

Category 2: Purpose-built Islamic core The platform was designed from the start for Shariah-compliant banking. The GL is built on AAOIFI accounting standards. Product structures have their own separate accounting logic. The ACE and compliance team are treated as first-class users.

Your evaluation should establish which category a vendor falls into before wasting time on feature demos.

Evaluation framework: six dimensions

1. Shariah governance architecture

This is the highest-stakes dimension. Ask the vendor:

Does the platform have a dedicated ACE portal — not just email notifications?
Is there a Fatwa repository? Is it searchable? Is every product linked to the Fatwa that governs it?
Can the ACE review and approve new product structures within the platform, or does this happen externally?
Is there an audit trail of all ACE decisions?

Red flag: The vendor says “we can configure a workflow for your ACE.” Configuration means it was an afterthought. Ask to see a working demo of the ACE portal, not a mockup.

2. GL and accounting architecture

The general ledger reveals how the platform was built. Ask:

What accounting standard was used to design the chart of accounts? AAOIFI? IFRS? Conventional banking?
Show me the GL posting rules for a Murabaha transaction. Where does the markup go on disbursement? (Correct answer: Deferred Murabaha Income, a balance sheet liability — not income)
How does the platform handle Mudarabah profit pool distribution? Does it actually calculate from investment returns, or does it post a predetermined rate?
Show me the trial balance in real time. Is it balanced?

Red flag: The vendor cannot explain the GL architecture without bringing in a technical consultant. An MD should be able to get a clear answer.

3. CBN reporting

Nigerian non-interest MFBs have specific CBN reporting obligations. Ask:

Which CBN returns does the platform generate? From what source — directly from GL, or via export?
Can I pull a CBN return for a prior month in under five minutes? Ask for a live demonstration.
How are the returns formatted? Do they match the CBN’s prescribed templates?
What happens when the CBN issues a new return format — how long does it take to update?

Red flag: Returns are generated via Excel export + manual formatting. This is not a platform capability — it is the absence of one.

4. Migration approach

How you get onto the new platform matters as much as the platform itself. Ask:

What is the migration methodology? Is there a defined programme with phases?
Is there a parallel run period, where both old and new systems are live simultaneously?
What is the minimum parallel run duration you recommend?
How do you map legacy accounts (which may be labelled “interest income”, “loan receivable”) to the new AAOIFI-aligned chart of accounts?
What happens to historical data? Is it migrated? Archived? Accessible for audit?

Red flag: The vendor proposes a “big bang” cut-over with no parallel run. This is high risk and suggests they have not done complex migrations before.

5. Total cost of ownership

The licence fee is rarely the largest cost. Evaluate:

Is pricing per seat, per module, per transaction, or institution-tier flat? (Flat is simplest and most predictable)
What is included in implementation? Training, data migration, parallel run support?
What does Year 2 support cost? Is there an escalation rate?
Are regulatory update patches included, or do they cost extra?
What happens if the platform needs to generate a new CBN return — is that a billable change request?

Red flag: Extremely low licence fee with heavy per-seat or per-module pricing. Calculate the 3-year total, not Year 1.

6. Implementation timeline and programme

Ask for a written implementation plan, not a verbal assurance:

What is the typical timeline for an institution of our size and current system?
Who is the implementation team? Is it in-house or outsourced?
What is our institution’s responsibility during implementation? (Staff time is a real cost)
What is the go-live definition? When is the vendor’s obligation complete?
What support is available in the 90 days after go-live?

Questions that reveal the most

If you only have 20 minutes in a vendor meeting, ask these five questions:

“Show me the GL posting for a Murabaha disbursement — line by line.” A vendor who truly understands Islamic finance can answer this in under two minutes.
“What accounting standard is your chart of accounts built on?” The answer should be AAOIFI FAS, or at minimum a clear explanation of how their CoA aligns to it.
“Show me the ACE portal — not a slide, the live system.” If they cannot, it does not exist.
“How long does EOD batch processing take at an institution with 5,000 active accounts?” Under 10 minutes is achievable. Over 2 hours is a red flag.
“What does migration from BankOne look like? How do you handle the ‘interest income’ GL accounts?” The answer reveals whether they have done this before.

Reference checklist for the evaluation committee

Before selecting a vendor, confirm:

This guide reflects the experience of practitioners who have been through Nigerian non-interest MFB core banking evaluations. It is not legal or financial advice. All vendor claims should be verified through direct demonstration and reference checks.