Finacle eyes US

Finacle, the core banking solutions from Infosys Technologies, is in the right position to make a foray into the US and European markets in a big way.

These markets are likely to open up a huge replacement opportunity for core banking solutions, according to Merwin Fernandes, vice-president, global head-sales & marketing, Banking Business Unit, Infosys Technologies Ltd.

Finacle has just announced the results of its new scalability test where it achieved 11,180 transactions per second in online mode, improving its own previous record of 7,357 transactions per second.

Speaking to Business Standard on the sidelines of the announcement, Fernandes said banks in US are coming out of a phase where they required solution providers to fix specific problems in their legacy systems. Instead, they are beginning to invest in the replacement of the legacy system.

"The replacement wave has just begun in the US and the Europe. While there are large vendors for core banking solutions in these markets, they not only have a traditional approach to providing solutions, but are also very US-centric. This is the point when there is a strong inclination for next generation vendors like Finacle. Since most of the existing large vendors in the US and Europe are tried and tested, we see a huge opportunity to enter these markets and emerge as leaders in that space," Fernandes explained.

Terminos, Fiserv, Altel, Jack Henry, Hirchman are some of the better known vendors in the US while Europe is dominated by players like Terminos and Mysis.

Though these vendors have been around for a very long time and they mostly fix patches for problems in legacy systems, Fernandes feels that banks in US and Europe are finding the need to replace them with new solutions.

"Since they have begun to look for new generation vendors, Finacle is well-positioned to meet their needs because of factors like scalability, number of live sites, Infosys parentage and our track record," he said.

According to the findings of Celent Communications, a US-based research agency which has published data on the opportunity in core banking solutions, the Top 100 banks under the Tier-I category are likely to spend approximately $100 million per bank to replace their legacy systems.

Of this, nearly 25 per cent each would be spent on software and hardware, respectively, while the rest would go to other internal and communication costs.

Maintenance of systems is another big opportunity. However, this will come only at a later stage. Currently, Finacle has been installed in 2-3 banks in the US.

The banking business unit contributed $35 million in revenues for Infosys last fiscal. Over 80 per cent of this came from sales while the rest came from maintenance and services.