California-based Union Bank has cancelled a $20-million contract with Infosys to implement its core banking software product Finacle, a development that could potentially hurt the product?s prospects in the US. The Union Bank was Finacle’s first customer in the US and Infosys was in the middle of a first stage roll out of the product. The contract was canceled this week.
The implementation was not canceled because of technical issues, executives from the firm maintained. Infosys said that the bank?s priorities had changed. ?We were in the first stage of implementation. The value of the contract was close to $20 million and could have become bigger. The bank was Finacle’s first client in the US And to that extent, it is a loss,? CFO of the firm V Balakrishnan told FE. He has recently taken over as head of the product after the former chief, Mohandas Pai, quit.
Union Bank is the primary subsidiary of UnionBanCal Corporation, a financial holding company with assets of $80.6 billion as on March 31, 2011. Union Bank provides financial services to individuals, small businesses, middle-market companies, and major corporations. The bank operates 401 banking offices in California, Oregon, Washington and Texas and two international offices.
An official statement from the firm said Union Bank had sought to drive strategic growth by upgrading and streamlining its enterprise-wide technology platform.
?Infosys and Union Bank have been working together on an integrated banking platform for the last two years. While the parties have made good progress, Union Bank’s changed business priorities have led the bank to discontinue the programme. Union Bank and Infosys have parted on amicable terms, and Union Bank wishes Infosys all the best in the US market,? the statement noted.
Finacle is one of the rare success stories in Indian software products globally. The product runs 47,000 branches worldwide and raked in $295 million in FY11, growing 42% over the previous year.
While the product has been widely deployed in India and the Middle East, the firm had started to market it in the US.
About 30 banks run on Finacle in India. In May, FE reported that Infosys had started offering Indian cooperative banks a cloud version of Finacle, dabbling into what some experts estimated is a R2,000 crore market.
?There will be a psychological impact in the short-term and not much revenue impact. However, given the company’s focus in the market, there are more opportunities. Infosys can target 300 to 350 mid-banks in the US which are looking to upgrade their core banking systems,? TR Madanmohan, managing partner of consulting firm Browne and Mohan, said.
