Betting on Banks

Ravisankar began his career in software in 1986, followed by a tenure in

Citicorp Overseas Software. He then took over as the head of i-Flex’s IT

services business in 1993, which was just a start-up then. Today, Ravisankar is

the company’s CEO, international operations and technology. He is responsible

for the company’s products and services businesses, global marketing

operations, and new global business initiatives

On why i-Flex is entering the US banking market now...



The US market accounts for 60-70% of global spending on technology by

financial institutions and is obviously of great significance to us. However,

our model here is product focused. When we were small, the barrier to entry in

the products space was very high. We couldn’t just go to New York and tell

Chase Manhattan to buy our banking product. Our strategy has been to first

penetrate the emerging markets where barriers to entry are very, very low, and

establish an excellent reference base. Between 1993-97 we were primarily

targeting emerging markets like Malaysia, APAC and Africa. Last year, the

biggest chunk of Flexcube sales (about 30%) came from Europe. A few years ago,

that would have been unthinkable. Clearly, a phased, planned shift from emerging

to developed markets is working. We can see it not only in the number of sales

but on the average size of license fee of each sale. The next logical step after

that was of course the United States... as to why we’re moving to the United

States after Europe? The mindset of the American decision maker is very oriented

toward American institutions.

On the sectors being targeted...



The various segments we are looking at are large money center banks like

Bank of America, JP Morgan and Citigroup. There are about 8-10 such banks with

multi-billion dollar assets. However, it is clear that they will never buy a

bank in a box. First, they will have their own unique departmental systems.

Second, they also tend to have a large IT infrastructure and a lot of IT people

of they own and do a lot of their own work in-house. To such banks you don’t

go and say: "Here we have Flexcube, which is our own universal banking

solution." Instead, you go to them departmentally and say: "This is

our loans module, this is our general ledger module and this is our brokerage

module." Basically, we’ll have to go to them with different products and

solutions.

Preparing for the launch...



We’ve been preparing for more than a year for the launch of the product in

the US. You have to have supporting material that talks the language of the

market. The product has to be streamlined, you have to have visibility, you have

to have support and service facilities in place. First we hired some consultants

who knew the market They did an entire product walkthrough with us as a result

of which we changed some of the look and feel of the products and also changed

how we talk about the product. We also identified gaps in understanding the

regulatory mechanism requirements which are in an advanced stage of being fixed.

Second, we set up a sales office and a local infrastructure subsidiary—iFlex

Solutions Inc. We now have a direct presence in New York, Boston and California.

Third, we talked to many technology and business analysts and introduced I-Flex

and Flexcube to them. So if somebody now goes to say, Gartner, and tells them

that they are trying to evaluate Flexcube, Gartner is not likely to say Flexcube

what? Fourth, we’re setting up local execution capabilities. And getting in

people who will understand the product, can execute and implement it. For this

we are mostly moving people from the development center here to there.

On the credibility of Indian companies in the products space...



Clearly, it was an issue that we faced though it has become less of an issue

over time. The story of Indian software services is very well known and

credibility levels there are already good. But barriers in terms of products is

very high. We have a great deal of credibility now however, because we don’t

do anything else. And we have a very credible reference base in 75 countries. We’ve

also done well in international ratings–ranked number 2 in 1999-2000 and

number 3 in retail banking. Finally, we’ve not just done small banks in

emerging markets but large banks in Europe. That makes a difference. Finally, US

companies look for financial viability and stability of vendor and there we are

very well placed.

On the issue of clear product lines in sophisticated markets...



Not really a big issue. First, the financial products space is itself

relatively new. Second, it’s not as if these banking systems are updated every

year or so. However, the product roadmap is there and clearly European markets

have been satisfied with it. I’d like to point out though that it’s a

mistake to say that banking services in emerging markets are less sophisticated

than the developed markets. HDFC, for instance, was among the first worldwide to

launch mobile banking. That’s not a common service even in the US, and many

players there still run legacy systems and packages.

SARITA RANI in Bangalore