Banking on Indian ISVs

From launching Microsoft Office for banks to tying up with independent software vendors, Microsoft is trying its best to conquer the Indian BFSI space, says Srikanth R P

In a recent interview to Express Computer, Navi Radjou, Vice-President, Enterprise Applications, Forrester Research, commented that organisations do not have to invent or create products to succeed. He held up Dell’s partnership with Lexmark in the printer business as an example. Dell does not manufacture printers, but it’s using its distribution network to push Lexmark’s printers with its brand name.

Dell is not the only company taking the partnership route. Microsoft is now using the strengths of Indian product players to push a bundled value portfolio in the Indian BFSI segment.

Plugging the gaps

Although Microsoft has a powerful brand, it lacks products in the core banking, cheque truncation and anti-money laundering space. The Redmond-based giant has therefore sewn up a string of partnerships with Indian ISVs (independent software vendors) to extend its reach to the Indian BFSI vertical. Indian banks are making substantial investments in software, and IDC estimates that the opportunity for packaged software in the Indian BFSI space will rise to $500 million by 2008.

Says Tarun Malik, Application Server & Enterprise Marketing Manager, Microsoft India, “We are working with several partners to provide solutions that can be integrated along with our server platform to provide an ‘In-the-box’ offering.” These solutions are aimed at niches that have been created on account of regulations such as anti-money laundering, cheque truncation or Basel II, as well as those that address the priorities of banks such as credit risk management. The company’s partners include Natural Technologies, D2K Technologies and Newgen.

Natural offers products in the core banking and branch automation space, Newgen is a player in the document management and cheque truncation solutions space, while D2K Technologies offers products which help banks generate MIS reports to be submitted to regulatory authorities. Till recently Microsoft had established partnerships with 102 Indian ISVs in the BFSI space. Through its latest initiative, Microsoft gets to market all of its products to the BFSI industry. The spotlight here is on the SQL Server, BizTalk Server, Windows SharePoint Services, Microsoft Office System and Exchange Server.

Rural banking sector

The success of Microsoft’s ISV strategy in BFSI can be gauged from the number of deployments of the bundled portfolio that have taken place. Natural Technologies has 35 banking customers with a network of 2,400 branches, all of whom run SQL Server as their back-end database. These ISVs would have found it tough to achieve this level of success on their own. Says Ripu Daman, Managing Director of Natural, “Even when we did not have any product installations, Microsoft did joint seminars with us and helped us promote the product.”

Marquee clients such as Punjab National Bank, Allahabad Bank, Bank of Baroda and Indian Bank have gone in for these solutions. Significantly, the alliance has managed to register a large number of wins in the rural banking sector with the likes of Haryana Kshetriya Gramin Bank, Hisar-Sirsa Kshetriya Gramin Bank, Himachal Gramin Bank, Shivalik Kshetriya Gramin Bank and Kapurthala-Ferozpur Kshetriya Gramin Bank signing up. All these banks use Natural’s branch automation product, with SQL Server as the back-end database. Microsoft’s push to adopt local ISVs in the rural banking segment is key, as Oracle, the company’s major competitor in the database segment in India, has been winning a huge number of deals in the segment using the Oracle-Linux combination.

Meanwhile, D2K Technologies is raking in orders for its credit risk and non-performing asset (NPA) monitoring application. As per RBI regulations, banks are supposed to make periodic submissions to the RBI and give information pertaining to NPA, loans and liabilities. Explains V K Sudhakar, Managing Director, D2K, “For most PSU banks, submitting MIS reports to different regulatory organisations is difficult as the information comes from various systems. Our product, CRisMAC, uses SQL Server at the back-end and helps banks generate these MIS reports.” The company’s clients include Punjab National Bank, Bank of Baroda, Vijaya Bank, Dena Bank, Bank of Maharashtra and Bank of Rajasthan.

Microsoft has also been quick to tap opportunities. Take the case of RTGS, where Shamrao Vithal Co-operative Bank put together a solution using Microsoft’s products for routing transactions through RBI’s RTGS. Says Ravikiran Mankikar, Chief of Information Technology at Shamrao Vithal, “As our [IT] staff was familiar with Microsoft technology, we used BizTalk Server to be RTGS-compliant.”

Database to the fore

Microsoft’s SQL Server will be its flagship product when it comes to the banking space. As the back-end database for all partner products, Microsoft wants to convince these banks to use SQL Server for extracting intelligence from their data. The company claims that with OLAP and data mining functionality built in SQL Server, organisations have a tool that lets them synthesise huge volumes of information and extract intelligence. In India, HDFC Bank has used SQL Server to build a data warehouse that contains over 1.3 Terabytes of customer information. Malik believes that with BI capabilities in the database, Microsoft can make huge inroads in the Indian banking sector.

Solutions for each and every vertical

The company is also working with Indian organisations to develop industry-specific solutions. Along with TCS, a couple of hardware vendors, and the Centre for Banking and Information Technology at the Indian Institute of Information Technology, Bangalore, Microsoft is working to develop a solution that will help deliver rural credit in a cost-effective manner. The goal is to develop a delivery system for financing small organisations or individuals in rural India. The company is also working with local ISVs to create a demand-draft verification system that will help banks curb demand-draft fraud. It is also marketing integrated solutions that connect BFSI companies and their partners for cross-selling. For instance, you could buy travel insurance on phone from ICICI Lombard and pay at the nearest ICICI Bank ATM.

Then there’s Office System...

Microsoft has not forgotten its flagship application suite, Microsoft Office System. Work is afoot to create a specialised version of MS Office for public sector banks. According to RBI regulations, all public sector banks need to have bilingual software supporting Hindi and English—and there are 44 public sector banks. Microsoft therefore intends to launch ‘Office for Banks.’ This will consist of Office Hindi with several add-ons that have been developed in conjunction with its partners. Microsoft’s intention to create ‘Office for Banks’ is part of the company’s efforts to thwart the success of alternative office suites available from vendors such as Sun Microsystems (StarOffice) and C K Technologies (Shakti Office) in the banking space. HDFC Bank uses StarOffice while Bank of Baroda uses Shakti Office.

By roping in Indian ISVs to provide the missing links in its BFSI strategy, Microsoft wants to get the Indian BFSI segment to use SQL Server for BI and buy Office for banks. Once Microsoft succeeds in convincing Indian banks to use Office as the front-end and SQL Server as the database at the back-end, it will be in a position to convince them to adopt its other products such as BizTalk Server and Exchange Server.

srikanth@expresscomputeronline.com