Cashing On Banking

BFSI is not just one of the fastest growing industries in
India, but one of the biggest consumers of technology today. With the economy on
a roll, retail banking has emerged to be the biggest money-spinner for banks.
And if you happen to be a technology company in the right place and with the
right product, then there's no stopping you.

The story of CashTech is exactly that. This Pune-based
company, which was showcased at Nasscom for its innovative product development
work has been able to bank on its cash management solution called
TransactCentral Assembler. It is an Internet based transaction settlement
platform building on new and existing cash management and transaction settlement
capabilities. The objective is to optimize the cash management services of the
customer-retail or corporate. And now with Real Time Gross Settlement (RTGS)
and Cheque Truncation, the pie has just become larger for CashTech. Then
there's Basel II as well. Says RN Iyer, one of the key founders, “Basel II
is the most recent opportunity for a player such as CashTech, something that we
did not foresee 12 years back.”

Identifying the Opportunity

It was Iyer, an alumnus of IIM Ahmedabad (IIM-A), who first identified the
opportunity in banking and finance. It was his consulting background-Iyer was
with Accenture-that helped him do so. The business proposition seemed perfect
because of two reasons-one, huge opportunity in terms of the market that can
be tapped and two, the reputation that most banks have of making definite and
timely payments. The domain had all the characteristics that one requires to
identify a business opportunity. But why product development? Explains Iyer,
“We were never interested in services. Our sole motive was to develop IP
because we saw better margins in the license model.” In 1994, Iyer, along with
Raj Subramaniam, also an IIM-A alumnus and an industry veteran from Citibank's
software subsidiary Citicorp Overseas Software, and KC Bhushan, who was with
Pricewaterhouse Cooper's IT consulting division before embarking upon an
entrepreneurial stint with CashTech.

RN Iyer, founder and MD, CashTech

After being established in Mumbai initially, the trio moved
its operations to Pune in 1996. Pune proved to be not just economically viable,
but also had the perfect ecosystem for product development and smaller
companies.

One of the highlights of the initial years is the
implementation of CashTech's first ASP in India in partnership with Standard
Chartered Bank and HDFC Bank. Nearly 12 years later, CashTech has come a long
way. While 2001-03 was slow and slightly uncertain given the global recession,
things turned around in 2003 when Cash Tech saw the demand climbing. The last
couple of years were good for Iyer and team. That's understandable given
CashTech grew at 60% y-o-y. The company closed last fiscal with revenues
amounting to Rs 26 crore and expects to close the current fiscal at around Rs
35-36 crore. Employee strength has also increased over the years with CashTech
employee 300 people today. The company has also branched out beyond India and
moved to other Asian geographies such as Japan and Singapore, in addition to the
US. While Iyer heads CashTech's India operations out of Pune, Bhushan is
driving the business out of Japan and Subramaniam out of Singapore.

Going Great Guns

Today, CashTech has around 28 customers-both in India and in the Asia
Pacific region. Notable among its customers are Bank of Asia, ABN Amro, Deutsche
Bank, Land Bank of Phillipines, SBI, HSBC, Shinsei Bank, and BNP Paribas, to
name a few. Last year, the addition of around eight European banks to its
customer portfolio was a feather on its cap. Between January and March, the
company also bagged three large-sized projects. And the team is beaming by
grabbing big-time projects this year.

The two big time product companies in banking from India
are i-Flex and Infosys. While i-Flex's Flexcube enjoys significant market
share in the global banking arena, Infosys' Finnacle is the more dominant
banking product in the domestic market. So what is it like to compete with the
big daddies of software products in banking? Iyer takes great exception to the
question. “We do not compete with the likes of i-Flex and Infosys. In fact, we
partner with them,” he states. Finnacle and Flexcube cater to the core banking
market, which is not the water, which CashTech solutions tread. Adds Iyer,
“Both i-Flex and Infosys are essential partners to our growth strategy.”
CashTech has forged strategic alliances with Oracle and IBM. It has also tied up
with the likes of UAE-based Esquire Systems, Thailand's Stream IT Consulting,
SDI Technologies from Indonesia, and Phillipine's TIM to broaden its reach to
newer and more diverse markets.

Accolades Galore

CashTech success has also come with a fair share of recognition as well.
Recently, the Tower Group in an article on cash management identified CashTech
as the leading cash management vendor in the APac region.

In a Financial Techonology Users' Survey conducted by
Euromoney magazine last year, CashTech was rated as the Best Cash Management
Solution. Interestingly, CashTech was second in the same survey in 2004. It's
solutions received wide acclaim in last year's Banker's technology awards as
well.

In 2004, US-based payments and technology vendor Fundtech
acquired CashTech. Says Iyer, “Fundtech will leverage our dominance and strong
foothold in Asia to penetrate the market.”

Some Teething Problems

While all may seem hunky dory for CashTech, there are some teething concerns
too. That is, while India has established itself as a services superpower, why
is product development nowhere near services? “The government needs to create
a more viable environment to encourage product development,” says Iyer.

Key areas that should be addressed are one, to encourage IP
from the point of taxation and two, from the point of retention of talent pool
to do innovative product development work.

The signs are at least promising with Nasscom taking the
initial steps towards this by making efforts to promote these innovative product
companies. While the present is definitely bright for CashTech, the future
appears only better.

Bhaswati Chakravorty

bhaswatic@cybermedia.co.in