The mergers and acquisitions (M&A) that may happen in the Indian banking sector may open up more opportunities for financial technology companies, said a top official of FIS-India. The M&A may impact companies having CBS as their main product, but it is no longer the only source of truth for banks. Incidentally, FIS had supplied CBS to Bharatiya Mahila Bank that was merged with the State Bank of India (SBI). The SBI also merged with itself its five associate banks – State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT).
“Mergers in the banking sector will open up huge vista of opportunities for companies like FIS with end-to-end offerings for banks. A new generation is going to attain 18 years of age in 2018. The way they would interact with banks and their service demands would be entirely different as compared to those who were born in the previous century,” Ramaswamy Venkatachalam, Managing Director-India and South Asia, FIS, told IANS on Friday.
“This provides us the opportunity as the banking landscape is set to change dramatically,” he added. The US-based $9 billion revenue FIS is a global major in the financial services technology with a focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions. The company is one the three top payment processors in India and has over 13,000 employees.
“Technology is rapidly evolving in order to provide a world class experience to the end customer. No longer is core banking the only single source of truth, but only one of the sources. For example, the view that mobile banking or internet banking provides is derived out of multiple sources such as credit cards, insurance, mutual funds, lending, depository systems and others along with the core banking,” Venkatachalam said. He said integrating these is difficult, however necessary as these provide a superior customer experience. The end customer looks at their institution as an end to end finance provider rather than a banking provider- which gets enabled through technology.
“Along with this, while the core itself is less change driven, your channels and processes are the ones that are undergoing intense changes. Customisation requests happen more on the channel side rather than the core side,” Venkatachalam said. Increased customer demands, channels and changing technology are making the banks to think to go for a new and comprehensive banking solution replacing their existing CBS, he added.
That apart, the market landscape now also includes non-banking finance companies (NBFC), non-governmental organisations (NGO) for financial technology products. He also said the digital banking would not take out transactions out ATMs but the market landscape would shift from urban centres to semi-urban and rural areas, thanks to the government’s Jan Dhan bank account scheme.
“The demonetisation had affected ATM transactions. But once the government relaxed the cash withdrawal restrictions and currency circulation improved, the volume of ATM transactions more or less remained the same but the value of amount withdrawn were more,” Venkatachalam said. FIS manages over 12,000 ATMs for several Indian banks.