Chennai: The financial services sector is witnessing a flurry of activity with the entry of traditionally non-finance players like General Motors, Toyota and Microsoft, which are redefining various paradigms in the segment.

With Gartner estimating the likely global IT spend by financial services players at $381 billion this year, domestic banking, financial services and insurance (BFSI) software players are vying to grab a juicy piece of that pie.

Says i-flex Solutions CEO (international operations and technology) R Ravisankar: ''Thanks to the Internet, the method of service delivery to end users is undergoing a major transformation. The percentage of credit initiated on the Net is going up.

''Today there are loan-aggregators on the web like US-based Lending Tree, which has forced traditional lenders like banks to bid for loan sanctions, while the potential borrowers can chose their lender sitting before their computer.''

A graduate of Indian Institute of Technology, Madras, and a post-graduate in business administration from the Indian Institute of Management, Ahmedabad, Ravisankar moved to software industry in 1986 after starting his career in management consulting. He worked with Citicorp Overseas Software before he joined i-flex in 1993.

Based in the US, overseeing the company's global markets, Ravisankar recently visited Chennai. In a brief interaction, he talks about the emerging trends in the financial services industry and its implications for the software companies. Excerpts:

It is reported that many European and American banks may replace their old software solutions. Has it started happening?
Many international banks have started replacing their legacy banking solutions. All the deals that are being concluded by BFSI software players are replacement contracts. They are also investing in efficient middleware to integrate their legacy systems.

What are the emerging trends in the global financial services sector and how is technology driving the change?
The clear trend is movement towards virtual transactions rather than physical. The Internet has impacted the financial services industry in a major way. Today many new players - traditionally in non-finance - are getting into the field and leveraging the World Wide Web. Further, delivery channels of financial services have proliferated and this has resulted in increased customer expectations.

The percentage of credit originating on the Net is increasing. Today a borrower has the power to choose his lender sitting in his premises unlike earlier days when he had to approach a bank manager in person.

The emerging trend is electronic bill presentment payment (EBPP) whereby the bank or financial services provider captures various bills - utilities, insurance etc - online and waits for online authorisation from the accountholder to pay the same. Here the consumer does not get a physical bill as it is happening now. Everything is in electronic format.

Apart from the comforts offered to the consumer, EBPP results in huge cost savings for the service providers and some utilities in the US actually offer an incentive for switching over to the electronic mode of bill payment.

Account aggregation is yet another new trend that is becoming popular among foreign banks. Under this, a bank customer can transact or visit his favourite sites by just logging on to his bank's portal.

How is your $200-million Citibank order coming through?
The implementation of the company's core banking solution, Flexcube, at Citibank is progressing at a good pace. i-flex has assigned around 100 employees for the contract that spreads across 100 countries. Flexcube is replacing Cosmos, a banking solution developed by Citibank in house.

While we hope to increase product business from the Citi group to 20 per cent, we are also looking outwards to increase non-Citi business. Our idea is to reduce the share of services revenue from the US banking group to 25 per cent. Currently 75 per cent of our service revenue is from Citibank.

At a time when other domestic software players like Infosys Technologies and Polaris Software Lab have got into the business process outsourcing domain, does i-flex have any plans to follow suit?
We have been considering such a proposal for quite sometime now. We are open to both the ideas - acquiring an existing operation or start from scratch. Similarly, the company is planning to invest in development software solutions for the insurance industry. Acquisition is one way of getting into these segments.

On the products side we expect Reveleus - a business intelligence solution - to do well, apart from the Flexcube suite of products.