Finacle on the cloud and other developments
In the first half of 2015, there were two cloud-related developments. First, Infosys teamed up with Microsoft for Finacle on Azure. And Infosys signed a deal with Qantas Credit Union in Australia for a private cloud deployment. The partnership with Microsoft had an initial focus on the cloud for testing and development, plus a ‘cloud bursting’ option, whereby Azure could be used to cope with peak volumes. ‘Azure is gaining a lot of traction in the marketplace,’ said Dua and he felt it was catching up fast with Amazon Web Services. He said Infosys would probably also make Finacle available on the latter, as it wanted to offer as much choice as possible, but Azure was the first such offering. There were no takers of the Azure option at the time of the announcement but lots of conversations had followed a recent launch to customers, said Dua. The interest in both the testing/development and ‘cloud bursting’ aspects was across the board, he said, although it was clearly only smaller institutions that were currently interested in a full production deployment.
The deal at Qantas Credit Union was for a private cloud depolyment, rather than Azure, but represented a notable breakthrough for Infosys in this sector. Qantas Credit Union is one of the largest in Australia and was interested in attracting non-employee customers and competing with the large banks. The deal spanned core banking, e-banking, mobile, digital and Infosys’ EdgeVerve digital contact centre offering. Infosys had of late been talking up the integration of Finacle and EdgeVerve, to the point where there has been speculation that the relatively recently established business might be merged with the Finacle unit. The project at Qantas Credit Union is intended to take
three years and would be done in three phases. There were a number of innovations planned, including a digital wallet, peer-to-peer lending and personal financial planning tools. In another announcement to customers, Infosys unveiled a monitoring service called Assure. This is using a tool from a Bangalore-based specialist that was set up by a number of ex- Finacle developers. It has analytics as well as alerts to provide proactive insights into performance. ‘Every bank needs to potentially deploy this service and we want it to be a standard offering,’ said Dua. In relation to the performance of Finacle specifically,
Michael Reh, the new global head of the business line, downplayed its previous underperformance (Finacle posted a 5.4 per cent decline in quarter-on-quarter revenue for Q2 FY2015 in October 2014). Speaking to IBS in December 2014, he said that he found Finacle to be a ‘very comprehensive and robust universal banking solution’, and did not foresee any sales execution issues or slowdowns in any of the geographies. Instead, he blamed any perceived underperformance on the way that Finacle books its revenue – according to percentage of completion instead of upfront.
Reh maintained this positive outlook during the company’s
Q3 FY2015 conference call with investors, in which he stated that the Finacle system had achieved 5.1 per cent quarter- on-quarter growth (showing a gradual clawing back of losses
made in 2014). He also claimed that the system had gained 18 new wins, as well as going live in 20 different locations globally. Reh added that he believed the system had been gaining momentum with a ‘good uptick in our demand, especially in western markets’. This ‘uptick’, he claimed, was due to market conditions, in which many banks were now actively seeking new technology, following a period of delay in modernisation efforts.
Emphasis was also placed on Finacle’s go-live at Discover Financial Services. Vishal Sikka, who had taken over as CEO in August 2014, said that the system would help Discover ‘bring new products to the market faster, automate compliance and deliver a great banking experience and enhance Discover’s operational efficiency’. Elsewhere, the Finacle Payment Solution had ‘set a new global benchmark’, according to Sikka, with the capability to process 75 million payments per hour. By this stage, Discover Financial Services had finally
reported the long-awaited go-live with Finacle, with the system customised to comply with US regulatory requirements. The direct bank had embarked on a technology transformation project, dubbed OTIS, back in 2010, with the implementation commencing in 2011.
Speaking at the BAI Retail Delivery conference in Chicago in November 2014, Rich McGhee, SVP, card, banking and lending technology at Discover, said that the first delivery was the deposits functionality and the migration of this business had been completed. There was a big-bang go-live, although he added that ‘I will never do another big-bang ever again’. It was a nerve-racking experience for the entire bank, he admitted, ‘when you flip the switch and hope it all works’, and despite it being a success, the bank was now more keen on the staggered model.
The next milestone would be the migration of consumer loans in 2015, followed by student loans in 2016. An additional complication here is that various business lines of Discover reside in different legacy systems, mainly due to the bank’s M&A activity over the years. Finacle core and Finacle CRM comprise about 50 per cent
of the overall architecture at the bank, said McGhee. The new platform connects to a number of third party systems and a front-end solution, known internally as Atlas, that deals with tellers and the call centre (a bespoke development, which McGhee described as a ‘vital component’ of the architecture). The project had input from a host of external consultants, including Cognizant, Ernst & Young and KPMG. Up to 300 staff from Discover had been working on the OTIS initiative, plus 700 third party specialists. The project has been a difficult one. It took longer and cost
more than anticipated. ‘Discover does not have a cost-driven culture. If it did, we would struggle to complete,’ McGhee admitted. When asked whether it was worth it, he replied: ‘It is still early days, but we will drive value from it.’ The current contract with Infosys was based on a fixed cost model, rather than a product model, he noted. Discover expected ‘the first significant benefits in 2015- 16’. Finacle replaced a legacy version of Fiserv’s ICBS (now
Universal Banking Systems Market Report |
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