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| 'Financial inclusion, rural banking to drive growth' | | Q&A: Haragopal M, Global Head, Finacle |
| K Rajani Kanth / Nov 12, 2009, 00:41 IST |
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 IT major Infosys Technologies' banking solutions arm Finacle, which currently enjoys a 65 per cent market share in the core banking segment, is looking at the financial inclusion frameworks laid down by the RBI, and the rural banking focus by governments in other countries as its next growth drivers. Finacle, which has 5,000 direct employees across six continents, says it sees good opportunity in the Islamic banking space as well. In an interview with K Rajani Kanth, Finacle's global head Haragopal M shares his views on future innovation in the banking technology, especially in the areas of financial inclusion and rural banking, and the company's growth trajectory: Edited excerpts:
How has the journey of the 'made-in-India' Finacle brand shaped up till date?
We have made a significant difference in the domestic as well as the global core banking market and, now, over 100 banks are servicing close to 300 million customers — or 5 per cent of the population on the planet — using our technology. Overall, the Indian core banking scenario is more or less done and what we are seeing now is the second wave of replacement.
Has there been any impact on Finacle due to the global slowdown?
No one can be an island in this market. During downturns, banks take longer time to take major decisions. However, they were able to take multiple smaller decisions. We have our Finacle universal banking solution that offers services like treasury, core banking and transmission. Our customers were able to make sure that their investments are in line with their immediate requirements.
In turbulent times, more than half-a-dozen of our customer banks have done global rollouts by prioritising their requirements. In these market conditions, we have done fairly well, with 11 customers going live and two client wins — two in EMEA (Europe, Middle East and Africa) and two in Asia-Pacific during Q2 of FY10. Currently, 50 per cent of our customers are spread across Asia-Pacific, 40 per cent in Europe and 10 per cent in America.
How did Finacle fare during the first half of this financial year?
In FY09, we have done revenues of $184 million, compared with $150 million in the previous year. In Q2 of FY10, our revenues stood at $48 million, while it was $97 million for the half year. The trend is there and it will be in line with what Infosys is saying in its guidance. We see India's financial inclusion and rural banking (the core banking wave in Europe and migration to Finacle 10) as drivers for this year.
Any new products or versions that you have lined up?
At any given point of time, two to three versions run on different product lines. Last year, we launched Finacle 10, which enables banks to transform their multi-country operations through standard platforms and processes. Most of our customers are running on version 10, which has a life of 10 years. We will be launching Finacle 11 next year. We do innovation in a very close association with our client advisory board and user forums through our own market research in all parts of the world. We just completed that in Europe, North America as well as in India.
Which geographies do you intend tapping with Finacle 11?
Our target is clearly the global market, essentially Europe and the US. In a way, Finacle 10 itself will be getting into the US, Europe and UK partially. We already have our Internet and new-generation banking platform in Australia and Israel. We will be launching new features and innovations in this platform pretty soon.
What are your focus areas?
In a market like India, financial inclusion and rural banking is really important and we are seeing some very good traction in these. We launched a rural banking suite and eight banks have already gone live. In the last three quarters, six rural banks adopted it and at least four of them are running 100 per cent on this suite. We will be launching this service in Latin America and Africa, too. In these markets, volumes are not as big as in India. In Africa, compared with five-six years ago, the network infrastructure is now much, much better and, hence, accessibility is easy.
What has been the progress on the Islamic banking front?
Last year, the Arab National Bank went live with our Islamic banking solution. We currently have two clients in West Asia and East Asia. There are many players who are tweaking their core banking to Islamic banking, as it is not interest but a profit-sharing concept. We have also approached the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions, which defines the guidelines for Islamic finance.
Islamic finance is increasing at a CAGR (compounded annual growth rate) of 25 per cent and, so, this is seen as an opportunity. Now more countries are showing interest in Islamic banking. We were there recently at the World Islamic Banking Congress, wherein we saw a lot of traction that would definitely translate into a good business segment. This is something on our radar and we will be ready with our solutions.
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