Finacle global head Hargopal M. engages in an exclusive interaction with Virat Bahri of B&E
B&E: Finacle has been one of the most talked about Indian IT services brands. What is the transformational impact of the product for Infosys?
Hargopal M. (HM): We were one of the first vendors to work with one of the public sector banks. We had a pilot incidentally here in Parliament street; the idea was very clear – that banking industry being a very mature industry, has defined processes, which can be standardised and encapsulated into a product, which can give time to market advantage for the banks; also bring in the advantages of best practices across various parts of the world. Finacle was launched in 2000. India was luckily going through the need for the next scale and looking beyond the total automation part of it how can we bring in anywhere banking, in terms of the customer part of it. The whole core banking transformation wave started in Asia Pacific. It’s a good made in India success story. In 2000, Indian banks used to look westward for best practices, now global banks look at India; average bank spend per capita of customer is $76, whereas in India spends $11-14. Indian GDP increased 184% between 2000-2010, bank deposits 500%, lending increased by 300-350%, while scale of staff has gone up by a mere 5%.
B&E: The core banking solution space is still quite fragmented. What is Finnacles core differentiation?
HM: The richness of the whole functional software in an integrated fashion is one. Core banking reaches millions of customers; today a benchmark is over 100 million transactions per hour. Finacle is very flexible with around 5000 parameters. The agility part is extremely high. When a bank like ICICI is looking to go and sell in Canada, they are not only looking at expat Indians. With one branch, they can reach many more customers like any other local bank. Then there is the efficiency dimension – how you manage the scale. In 2003, 92% of ICICI customers were serviced through branches. Now only about 13% are serviced through branches. We also have an excellent delivery track record. At any time, 6000-7000 projects are running across the company. The whole ability to partner the bank and take it through the journey is very important. A large Tier 1 bank has 2500-3000 sub systems, all disparate. Let’s say you need to retain 900 sub-systems and promote to the same level as the core banking; you have to integrate and rewire. The ability to address those integration challenges is the key. For banks, it is like “Changing the engine of the Boeing/Airbus while on a transit landing flight”. The client needs one throat to choke – whether it is consulting, BPO, infrastructure, product, ADM, performance management – I need to talk to one guy that brings them comfort.
B&E: What are the new technology challenges for global banks?
HM: Banks in India did not have a legacy problem, but these banks had a problem. So the option was to do it piece by piece, sans major commotion. We talked to about 400 C-level executives across Americas, Europe, Asia. During 2009-August to October, what is your major challenge. About 78% of the banks said that innovation is an important agenda. They want to look at how I will compete in these tough times better. A mid-sized bank wants to acquire the customers of larger banks when they are in trouble. Large wants to ensure that he holds on to the customer and ensure that he has a platform for future growth while the slowdown is there. For instance, when there is an M&A, where is the data; if it is strewn across 200-300 systems, it is a nightmare. For the same dollar, you have to now sweat it out much more. Whatever you are doing today, how can you do it doing it tomorrow at 40% or 60% of the cost is the challenge.
For more articles, Click on IIPM Article.B&E: Finacle has been one of the most talked about Indian IT services brands. What is the transformational impact of the product for Infosys?
Hargopal M. (HM): We were one of the first vendors to work with one of the public sector banks. We had a pilot incidentally here in Parliament street; the idea was very clear – that banking industry being a very mature industry, has defined processes, which can be standardised and encapsulated into a product, which can give time to market advantage for the banks; also bring in the advantages of best practices across various parts of the world. Finacle was launched in 2000. India was luckily going through the need for the next scale and looking beyond the total automation part of it how can we bring in anywhere banking, in terms of the customer part of it. The whole core banking transformation wave started in Asia Pacific. It’s a good made in India success story. In 2000, Indian banks used to look westward for best practices, now global banks look at India; average bank spend per capita of customer is $76, whereas in India spends $11-14. Indian GDP increased 184% between 2000-2010, bank deposits 500%, lending increased by 300-350%, while scale of staff has gone up by a mere 5%.
B&E: The core banking solution space is still quite fragmented. What is Finnacles core differentiation?
HM: The richness of the whole functional software in an integrated fashion is one. Core banking reaches millions of customers; today a benchmark is over 100 million transactions per hour. Finacle is very flexible with around 5000 parameters. The agility part is extremely high. When a bank like ICICI is looking to go and sell in Canada, they are not only looking at expat Indians. With one branch, they can reach many more customers like any other local bank. Then there is the efficiency dimension – how you manage the scale. In 2003, 92% of ICICI customers were serviced through branches. Now only about 13% are serviced through branches. We also have an excellent delivery track record. At any time, 6000-7000 projects are running across the company. The whole ability to partner the bank and take it through the journey is very important. A large Tier 1 bank has 2500-3000 sub systems, all disparate. Let’s say you need to retain 900 sub-systems and promote to the same level as the core banking; you have to integrate and rewire. The ability to address those integration challenges is the key. For banks, it is like “Changing the engine of the Boeing/Airbus while on a transit landing flight”. The client needs one throat to choke – whether it is consulting, BPO, infrastructure, product, ADM, performance management – I need to talk to one guy that brings them comfort.
B&E: What are the new technology challenges for global banks?
HM: Banks in India did not have a legacy problem, but these banks had a problem. So the option was to do it piece by piece, sans major commotion. We talked to about 400 C-level executives across Americas, Europe, Asia. During 2009-August to October, what is your major challenge. About 78% of the banks said that innovation is an important agenda. They want to look at how I will compete in these tough times better. A mid-sized bank wants to acquire the customers of larger banks when they are in trouble. Large wants to ensure that he holds on to the customer and ensure that he has a platform for future growth while the slowdown is there. For instance, when there is an M&A, where is the data; if it is strewn across 200-300 systems, it is a nightmare. For the same dollar, you have to now sweat it out much more. Whatever you are doing today, how can you do it doing it tomorrow at 40% or 60% of the cost is the challenge.
Virat Bahri
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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