IOB to rope in Wipro, IBM to market in-house CBS

IT majors, including Wipro and IBM, are keen to join hands with Indian Overseas Bank (IOB), which plans to float a subsidiary to market its in-house core banking solution (CBS). The Bank has sought the Reserve Bank of India (RBI’s) approval to float the company before March 2011.

According to a senior official, so far, 11 companies have shown interest. These include Wipro and IBM, who were mainly hardware vendors till now and did not have any CBS solution. The technical aspects of the new company had already been studied and now the bank was studying various models, he said.

“This includes whether we will implement the software ourselves or totally outsource. We are also studying the joint venture (JV) betwern State Bank of India and Tata Consultancy Services,” he said.

In 2005, TCS and SBI had formed C-EDGE Technologies, a JV company offering technology and consulting services to the banking, financial services and insurance industry. Meanwhile, M S Raghavan, IOB’s general manager (IT), said floating a subsidiary would help them unlock their potential and capitalise competence in this domain.

“The JV will create good synergy between the bank and its partner. Technology keeps evolving, we have to scale up and upgrade from time to time. To address this challenge, it is better to have a partner who can keep the bank abreast of technology and help unlock the true potential for both,” he said.

Currently, IOB has around 2,300 branches and does 4.5 million transactions every day, just 40 per cent of the utilisation.

Industry experts say if a bank the size of IOB wants to implement CBS, it would cost around Rs 300-400 crore. According to IOB’s Expression of Interest document, it wants to put in place a clear road map for its CBS Solution and other banking software solutions developed in-house, along with related maintenance, enhancement and change management processes.

To market the in-house CBS solution in India and abroad, moving to newer technologies and its upgradation has to be taken care of by the IT subsidiary.

The Bank may also consider transferring the ownership of hardware, network equipment and other IT-related outsourcing contracts open at the time of forming the IT subsidiary to various companies.