|By opting for unnecessarily high-cost solutions and placing unreasonable restrictions in their tender qualification requirements, many PSU banks are falling into an entirely avoidable IT trap, B Suresh Kamath, CEO, Laser Soft Infosystems, tells Venkatachari Jagannathan.
"Even large Indian banking software companies will not qualify for tenders from the nationalised banks for core banking solutions, on the strength of their product revenues alone. It is only because of their huge software services revenues that they are able to meet the tender norms. Such luxury is not available to us, as we are a pure products company," says B Suresh Kamath.
After implementing its core banking solution in two nationalised banks - Corporation Bank and Andhra Bank - Laser Soft seems to have hit a dead end with PSU banks. He feels some nationalised banks put up unreasonable tender conditions, requiring vendors to have a turnover of a couple of hundred crore rupees to qualify.
He says the cost per branch for a bank that implements Laser Soft's Laser Panacea banking solution works out to just Rs4 lakh, as against Rs1 crore in the case of the competition. The operational or maintenance cost is just one rupee per account per annum, as against Rs500 or over per account for the competition's software.
Kamath says Laser Panecea is the lightest core banking solution in the world. "The cost per transaction for Corporation Bank is just eight paise. Our programmes do not use huge bandwidth and do not require expensive hardware," he says, adding, "Corporation Bank's server costs just Rs6.5 lakh whereas other banks shelled out up to Rs25 crore."
Basel II norms require banks to store 12 years data, and Kamath claims that none of the rival core banking solutions have such a capability, while Laser Panacea has an archival capacity of 25 years. "We have developed a new programme and SBI has placed an order for it," he says. According to him, SBI saves a huge amount using Laser Soft's e-Circular product.
Kamath feels Indian banks have been caught in an IT trap. "Three years down the line," he predicts, "many banks may have to change their hardware."
Excerpts from an interview:
Oracle has taken over i-Flex Solutions. What does this mean for companies like Laser Soft?
It's a good development, as the competition will be fierce. There are chances that product prices may climb up. For players like us, there are several niche product segments. For instance, we have a product for ATM reconciliation. Several banks like our cash management software, ProFunds, as well as our e-Circular product.
What is Laser Soft's order book position?
Our order book position is Rs8 crore and we hope to close this fiscal with a Rs25-crore turnover. We are confident of getting a couple of orders for our Laser Panacea from large Indian banks and also from a bank in the Middle East. Besides, we have got two services orders from the US.
What is your strategy to grow the business?
The overseas market holds good prospects, and we have bagged a lot of orders in the Middle East. We have a marketing subsidiary up and running in the US. We're also looking at the application of Radio Frequency Identification (RFID) technology in the banking sector. Last year, Laser Soft entered the facility management business, and we now manage data centres for Andhra Bank, ICICI Bank, SBI, IndusInd Bank and Bank of Muscat, which brings in nearly 20 per cent of our total revenues.
Any other plans?
also see : B
Suresh Kamath: The humane CEO
We are contemplating selling around 25 of our intellectual property rights (IPR) assets. Every product has a lifecycle in a particular market. In the markets where we operate, some of our products have already run through their lifecycles. Some of our products are based on VisualBasic (VB), whereas the present trend is to go for Java-based products.