DEAR SHAREHOLDERS
t is with pride I address you this year. I do so with a tremendous sense of gratitudeto our company's employees across the world. I am delighted to be the part of thisfantastic and dynamic organization. The hard work and customer trust sustained standtestimony to the team work of our employees.
As I look back on the last decade we have witnessed a technological boom that haschanged all areas of life including professional personal and social. The banking andfinancial services industry has not escaped the transforming effects of rapidtechnological change. What was science fiction 10 years ago has become science fact todayand technology has changed the way we perceive life and interact with each other. Somemembers of the banking industry were reasonably good at adapting and integrating thetechnology changes in order to better serve their customers. There is a significant numberin the industry who failed to keep up with the pace of change especially after thefinancial crisis as its attention was focused elsewhere.
S.M ACHARYA
CHAIRMAN
On the other side innovation was becoming a much reduced priority for the bankstechnology index started to become a game changer in everyday business. Leveraging the newage technology and exploiting a regulatory regime that was in many areas quitepermissive Fintech firms began to offer consumers a totally new way to deal withfinancial solutions – a way that was far simpler faster and easier than whattraditional banks offered.
By bringing the innovative use of technology into the design and delivery of thefinancial services Fintech firms transformed and are still transforming. BlockchainArtificial Intelligence and robot advisors are just a few examples of the innovationsprovided by Fintech firms. However there is much more than just technology and itsintegration into the banking system. The Fintech firms introduced exceptional customerexperiences specifically in the most lucrative business areas that were typically offeredby traditional banks.
TRANSFORMING CUSTOMER'S JOURNEY
With all the noise in the market about technology – from AI to blockchain –it is easy to get carried away with the hype. While technology is clearly important weneed to remember that customers remain at the core of financial services. Of coursefinancial services operate in the wider economy and as such it is intrinsically linked towider economic cycles. However focusing on things that banks can exert more influence on;I think the biggest threat and opportunity will come from opening up of the chance tooffer better financial services. Fintechs pose a large and growing threat to traditionalplayers. Last year was a record year for Fintech investments – with more than $112billion invested worldwide. The challenges posed by new regulations such as Open Bankingare also significant. But where some see challenges others see opportunities. We areadvising our customers on how to counter the threats while capitalising on theseopportunities. The lending and transaction banking landscapes are complex and fastchanging. Delivering the products and services that customers expect demands a breadthand depth of functional coverage: breadth because customers have wide ranging needs– from simple overdrafts to complex leasing agreements – and depth because eventhe simplest overdraft is becoming increasingly complex. In transaction banking thechallenge of gaining the visibility that corporate treasurers need amid rising levels ofvolatility is making a difficult problem even more complex. Our solutions address theseissues for our customers. This is recognized and Nucleus is sought for its solidexperience gained in the realm.
With unpredictable fast evolving customer behaviour and rapid advancements intechnology digital capabilities are now rapidly becoming table stakes. Lending istransforming beyond digital and the lenders of tomorrow must be ready to deliver uniqueand personalized experiences that customers of tomorrow will demand. With more than threedecades of lending business domain expertise Nucleus Software is contributingsignificantly to this revolution in the financial services industry. Nucleus FinnOne NeoCloud combines the advanced capabilities of the 10 time winner of the world's best-sellinglending solution with cloud based model specific benefits. The solution which providesend-to-end digital lending capability along with mobile apps and readily integratedanalytics has already been adopted by 25 leading financial services companies in Indiawithin the last 21 months.
But it is more than that – the pace of change of technology the rise of an everchanging ecosystems and the regulators are all putting pressure on financial institutions.Old monolithic inflexible systems simply can't cope – they are difficult to changecostly to maintain and hard to integrate.
Nucleus solutions eliminate these hi-tech induced problems while also preparing ourcustomers for the future. Whether they are large banks digitising their entire retaillending process end-to-end or corporate banks providing advanced working capital financesolutions to multinationals or new market entrants disrupting their segment with loansapproved in minutes we serve them all.
Our solutions deliver the business agility today's lenders need to cater to the complexneeds of lending to retail customers as well as large corporate and small-to-mediumenterprises (SME) customers. We cover the complete loan lifecycle across multiplechannels including web portal and mobile. We are using cutting-edge machine learning andartificial intelligence capabilities in Nucleus Lending Analytics to enable lenders tomake faster and more informed loan decisions through data visualisation and businessinsight generation.
With all the focus on technology it can be easy to forget that financial services is a‘people business' – where customers rely on lenders to help them achieve theirambitions. And while a lot of attention is being paid to the potential negativeimplications of automation – for example the list of professions that might beeliminated by new technology – we need to remember that automation transforms ratherthan destroys. Take for example VisiCalc – the first spreadsheet software that waslaunched in 1979. It has been reported that it made hundreds of thousands of accountingclerks redundant. In the USA alone there are 400000 fewer accounting clerks than in 1980but there are also 600000 more jobs for regular accountants because crunching the numbersbecame cheaper more versatile and more powerful and hence the demand went up. Automationreshaped the workplace then and it continues to do so today. People are very adaptable andthey are very creative. People are the driving force behind our success and that of ourcustomers' success. The capability that Nucleus has to work on this adaptability andcreativity is what our customers recognize and look for working with Nucleus. I would liketo thank our customers for helping us learn with them to build a domain expertiseessential for transformation. Their continuous support and the confidence they havedemonstrated in us has helped us jointly create value that we are proud of.
Nucleus Software is a company that truly supports and believes in its people. Whatmakes Nucleus stand out is that Nucleus is convinced that every single employee has astake in the company's success. We are very team-driven and operate in a way that putscollective goals ahead of individual achievement. In last 3 decades we have grown veryquickly and we continue to succeed because we are an agile organization that can rise toany challenge we may face. I am delighted to see that – from leadership to teammembers – everyone at Nucleus is very enthusiastic and fun to work with. We love whatwe do and it shows in the strong relationships we have built with our customers. I amproud to be a part of this leading organization and pleased to witness that we keep ongrowing and keep on delivering great results all around the world.
Since our foundation in 1986 we have grown steadily expanding into new markets andnew countries building all the time on our values-based approach. While technologycontinued to evolve continuously throughout this period I think we are at an inflectionpoint – where the combination of advanced technology and business expertise candeliver tremendous change. The key factor is in how to put it to use how to use it tosolve business problems for one's customers. I think we have proven ourselves in thisregard over the last three decades and things will only accelerate from here.
We are a global business; with customers in more than 50 countries around the world. Inthe last year we have seen significant traction in markets all over the world includingVietnam Indonesia Kenya the Middle East and India. The level of engagement from ourcustomers continues to increase and we have seen some great opportunities coming inbuilding of course on our global footprint. We will continue to focus on our key marketsincluding India South East Asia the Middle East and Africa as well as our growingmarkets in Australia and Europe. We are also looking at the Americas as we believe oursolutions can help financial institutions in that region capitalise on the opportunitiesemerging in those regions that are created by digital disruption.
I would like to thank all our stakeholders including investors customers andemployees. We look forward to the continued support of all stakeholders in this journey.
S. M. ACHARYA
CHAIRMAN
Date: April 23 2019
