CanBank falls behind on software rollout

Canara Bank continues to fall behind on its plan to rollout a new core banking software across its branches. The bank, after missing a March 25 deadline to select a vendor consortium to implement the core banking software, is yet to select one.

The project, worth some Rs 250 crore, involves the vendor consortium to provide the hardware and implement the software. Canara Bank wants to rollout the core banking software in over a thousand branches that account for the bulk of its business.

Reliable sources in the bank told Business Standard, "We are still evaluating the bids and there is no date in sight today as to when the rollout will start."

The bank also wanted the core banking software rollout to coincide with its centenary year that starts next month. On its shortlist of vendors are Wipro, Hewlett Packard (HP) and International Business Machines (IBM) to provide the hardware and partner with a core banking software provider.

HP and Wipro are partnering Infosys Technologies, with its Finacle core banking product, and IBM, with Mumbai-based i-flex Systems, with its Flexcube product.

Bank sources say, "Typically, public sector firms always went for the lowest bid, but this time the management has decided to take a holistic view, and quality of the product and the vendors' service will be equally important."

Bids for the contract were opened on March 10. "A vendor was to be chosen by March 25" and by September 30, a pilot involving between 15 and 20 branches was to be rolled out. By December 2006, some 1,053 branches, chosen for bringing in about 85 per cent of the bank's total business, were to be part of core banking.

As a decision on a vendor consortium goes unmade, the bank may also face cost escalation, industry insiders said.

"The bank had in principal decided on an L1 (preferred bidder) and an L2 (the next one) but, the first party changed tack. In the initial bid, the L1 had not included various things and later went back and said it would cost more for all that to be included. This narrowed down the difference between the L1 and L2 bids. It still looks like the top bidder will get it, but it would be a close call," they said.

"The bank could still make a rapid rollout." Once the customisation, during the pilot, of the core banking product is done, "adding branches is simply following a well established routine," they said.