Finacle to consolidate in mature markets

Finacle, the core-banking software solution from Infosys' stable, after getting a hold on the emerging markets, is now preparing to enter the mature US, European and Australian markets.

The division which contributes around Rs 180 crore to Infosys' topline of around Rs 9,000 crore said that it is in an investment mode in an attempt to ride the growth curve which is expected to start in the mature markets.

Explaining the strategy to go after these markets, Merwin Fernandes, VP, Business Head, Finacle said: "Banks in the mature markets adopted technology in the early 1980 and 90s and now they are using the legacy systems. Usually, the lifecycle of such banking applications is 15-20 years and that cycle is coming to an end. These banks are aggressively looking at latest core-banking solutions and we are ready to target this opportunity."

Quoting extensively from various research reports on this opening, Fernandes said: "These large banks in mature markets are saddled with high maintenance costs. Nearly 75 per cent of their IT budget goes into just maintenance and this does not allow banks to innovate with technology. In fact the costs and risks of maintenance now exceeds the cost and risks of renewal, and legacy has become a hindrance. It is this specific target we are looking at as we expand and we are making sizeable investments for this."

Infosys Technologies over the last year invested close to Rs 45 crore for furthering this product.

Drawing statistics from Tower Group, a research firm which has done extensive work on this opportunity, Fernandes said that the maintenance cost will come down to 69 per cent from the 88 per cent of IT spending in banks by 2010.

"Nearly 14 per cent, totalling up to $28 billion is expected to be spent on new initiatives and of this $10 billion is expected to flow in for banking platform. This is a ripe opportunity for companies like us and the recent Oracle - iFlex deal is a clear indication on what is the sort of growth which is ahead of us," he noted.

Finacle highlighted that Gartner in a recent report said that, this banking division is expected to double its clients base from 91 by 2007.