NLS and KCB Bank in court over tech use
Kenya-based banking tech provider and integrator NLS Banking Solutions is seeking an injunction against Kenya Commercial Bank (KCB) for software infringement rights.
KCB uses NLS’s Offline Branch Solution for back-up in case its core banking software (Temenos’ T24) fails.
The vendor wants to force KCB through court to stop using its software and prohibit the bank from developing a similar IT solution.
KCB and NLS had a five-year agreement, which ran out last year. The negotiations to renew it failed, and the contract was terminated in November. However, the bank has continued to use the NLS technology.
So NLS took the bank to court.
According to the court documents, KCB has continued to use the software without the permission from NLS for 122 days since the agreement termination, leading to a claim of KES 244 million ($2.4 million) from the vendor – based on a daily cost of KES 2 million ($19,400).
NLS says it has incurred “huge losses from the loss of business and fraudulent use of its software” by the bank. It has urged the court to issue an order to prevent it from suffering “irreparable loss”.
In addition, the vendor also wants KCB to pay it KES 5.2 billion ($50 million) to compensate for lost business as KCB provided negative references to other banks. This, NLS, told the court, resulted in cancellation of deals.
According to the company’s CEO, Nagarajan Karthik, NLS lost business worth $9 million in Kenya, $14 million in Ethiopia, $3.5 million in Rwanda, $3 million in Malawi and $1.5 million in Myanmar.
In return, KCB has filed a response seeking arbitration with NLS.
KCB’s head of legal service, Bonnie Okumu, states in his affidavit: “I am aware that we all attempted to resolve the issues that arose, but this has not borne any fruit hence should be referred to an arbitration process and not before a court process.”