As the Commonwealth Bank and its big four peers contemplate offshoring IT to India, a Sydney-based banking systems vendor almost universally snubbed by the local financial sector has added another Indian bank to its client list.
Sydney-based Financial Network Services Pty. Ltd. (FNS) this week signed up the Central Bank of India (CBI) to a deal which gives it three of the top 10 banks in India.
With CBI currently running 3,200 branches and 18 million customers, the deal will automate around 1,000 branches which will move from existing legacy systems over to FNS’s core transactional and operations system called Bancs.
Banking analysts estimate the Central Bank of India deal means around 30 per cent of India’s banking transactional volume will now be handled by FNS’s Bancs software, which is being sold through a strategic partnership with Tata Consulting Services.
Privately held, FNS declined to give an official figure for the deal; however, the amount is understood to be in the tens of millions rather than hundreds of millions. While the amounts the Indian banking sector is spending on reworking its systems is far less than the hundreds of millions of dollars being spent onshore by Australian banks, the sheer size of India’s financial institution dwarfs Australian players by an order of magnitude.
FNS also provides core banking systems for India’s largest bank, the State Bank of India, which has 125 million accounts and 13,500 branches, as well as the government-owned Indian Bank.
According to FNS vice-president for corporate marketing Trevor Builder, one of the reasons FNS is doing exponentially more business overseas than at home is because most Australian banks are unwilling to walk away from investments in current, if siloed, core transactional systems.
“If we had to wait for any bank in Australia [to upgrade core systems] we’d go out of business,” Builder said.
Conversely, banks in non-Western economies are rebuilding heavily manual, or early EDI systems from scratch, allowing greenfields deployments on the latest standards and architecture, he said.
Chairman of the Australia India Business Council, Neville Roach, said FNS’s latest deal both validated the quality of Australian applications developers and the substantial opportunities available in the Indian domestic market.
“It’s really great. The Indian domestic market used to be trivial. Now there are fewer restrictions and better [telecommunications, there are] huge opportunities available to Australia,” Roach said.
However, he cautioned Australia’s governments needed to use their “persuasive powers” on multinational IT services operating in Australia to subcontract to local firms to build the local IT industry.
Roach said the question needed to be asked why multinational vendors operating in the local banking sector “haven’t included a company like FNS in their offerings.”