Cashing in on the boom for banking technologies, Infrasoft has achieved a firm footing in this core segment. Chitra Padmanabhan seeks to trace the company's route to triple-fold growth

At a time when banks were focusing only on retail banking operations, Infrasoft decided to tap areas like corporate banking, trade finance and foreign exchange—areas that were virtually neglected, says hanuman tripathi

It was the year 1993—a period when RBI had just announced its privatisation policy. The period was absolutely hot for banking. ‘HDFC Bank amongst the first to receive RBI approval;’ ‘ICICI Bank begins operations as a 75 percent subsidiary of ICICI,’ screamed headlines of business dailies. What followed was a boom in the banking technology space. This motivated Hanuman Tripathi, managing director, Infrasoft Technologies to create a specialised entity in the banking technology space. Public sector banks had already sensed competition from the private sector, which put banking technologies on the fast track. It was a timely beginning for a company in this space, when banks were looking for ways and means to spruce up their technology initiatives. “In this competitive scenario, where there was a market for banking solutions, the time was just ripe to start a company specialising in the core banking segment. Moreover there was tremendous pressure from RBI to complete branch automation targets,” says Tripathi. In its new regulation, RBI had set an ambitious yardstick of automating 30,000 bank branches in the period 1994-95, as against 4,000 in 1989-92. Tripathi decided to make the most of the situation and cash in on the business.

Concentrating on core competencies
The company realised that intense competition would fuel the need for innovative technology in the banking sector. So right from the beginning, the strategy was to focus on the lucrative banking and financial segment. Apart from the booming market, the founder’s experience in the banking and financial segment also contributed to the need for forming such a company. Tripathi became the anchor person and roped in Ramesh Govindan, Maninder Singh and Shekhar Ganapati—who had varied levels of experience in the banking and financial sector—as co-directors to form the company. Being involved in the banking industry for decades, the team could visualise trends that were likely to take place in the banking sphere.

“All of us had reached a stage in our career where we had enough knowledge and expertise to start out on our own and give entrepreneurship a shot. Additionally, the market needed people who understood the market from a banker’s angle and not the technology angle. This was missing in the market as most people had basic knowledge on how a bank functions at the grassroots level. We formed the company to fill this gap.”

The second and the most important logic that the team followed was that in the event of a slowdown, IT operations in the banking sector would be least affected because it is one sector that fuels the economy back to normalcy. This will ensure a constant flow of business as the banking sector seldom faced dearth of funds. “If you observe, if there is a slowdown in the hotel industry or the travel industry, the ripples of the slowdown will be felt in the IT sector as well. But in a slowing economy, the banking sector will still be up and running because it is the banking sector that will push back the economy,” says Tripathi.

Considering the market position at that time, the team also felt that in order to retain existing customers smaller PSU banks would spruce up their technology initiatives. Competition from foreign banks would also act as an added threat for PSU banks, which could be only solved by providing value-added services to customers. With the availability of Internet and phone banking facilities from foreign banks, customers were more likely to switch over to the bank of their choice. But the same developments would only prove to be advantageous to banking software players.

Identification of niche areas
After chalking a detailed roadmap for Infrasoft Technologies, what remained was to identify the solutions that were likely to be the company’s key differentiating factors. In a period when banks were scrambling to outsmart each other in terms of technological initiatives, Tripathi realised that in order to surge ahead of established players in the banking sector, Infrasoft had to anticipate the need for a particular technology and be among the first ones to provide it in the market. “All that was needed was to encourage out-of-the-box thinking and put ourselves in the shoes of competing banks to provide futuristic solutions,” says Tripathi.

After hectic boardroom meetings and long sessions with analysts, Infrasoft identified the niche areas that would help the company score over other players in the banking space. “At this stage we observed that banks were focusing only on retail banking operations like deposits, loans, savings and current accounts. Corporate banking, trade finance and foreign exchange were virtually neglected,” says Tripathi. Infrasoft decided to tap these areas. Yet, the company realised that banks would turn their attention to these areas in the long run. Secondly, the concept of electronic banking was virtually non-existent in any part of the country. Since banks were increasingly updating their technologies in tune with the needs of customers, Infrasoft realised that phone-banking and emergence of ATMs would be the next wave. This turned out to be the next niche area. In one of the company’s brainstorming sessions, the team also bumped upon the fact that the future would see an amalgamation of voice and data communication systems. Accordingly, Infrasoft built systems that were capable of supporting both voice and data. This was a futuristic move and Infrasoft is still reaping the benefits. Almost every banking system has this capability today.

The way forward
After spotting the key growth areas and identifying niche target segments, Infrasoft decided to quickly come out with an integrated product that would use an architecture-centric approach. “The idea was to provide retail and trade finance together in one system so that a bank could look at large scale deployments having capabilities of handling large volume transactions,” says Tripathi. In order to tap tech-savvy banks that already had basic TBA (total branch automation) systems in place and were capable of providing e-banking services to its customers, Infrasoft developed a product for e-banking. By 1997 they had two products in hand, which would kick off their marketing effort.

Clients
In an environment charged with acute competition, Infrasoft had to work hand-in-hand with banks to help them surge ahead. One of the earliest banks that benefited from Infrasoft’s vision was Abhyudaya Co-operative Bank. Tripathi today proudly proclaims that Infrasoft has practically nurtured the bank’s technological advancement. Cut back to 1996 when Abhyudaya Bank adopted a cautious approach to deal with a brand new company. It decided to sign a branch automation contract for its prime branches alone. “Being a brand new company we did not have an impressive client, but keeping faith in our vision Abhyudaya decided to be among our earliest customers,” says Tripathi.

The contract signed with Abhyudaya was only the first hurdle crossed, because the course of the company rested on its future dealings. The success of the initial project paved its way to further business. Today Abhyudaya has deployed Infrasoft’s OMNI Enterprise centralised banking package and Infrasoft has performed many branch automation contracts. After passing the first year with two contracts, the rest of the journey was almost a cakewalk. Infrasoft added seven customers in the next year. For the fiscal year 1996, the balance sheet showed an impressive Rs 7 lakh in revenues, which soared to Rs 2 crore for the fiscal year 1997. The company added nine customers in the year 1997. In the subsequent years, its efforts were directed towards setting up offshore offices and increasing its presence in global markets.

Setting high standards
During its progression, Infrasoft also realised that being in a highly competitive space, it had to set some standards that would differentiate Infrasoft’s products from the other players in the market. So Infrasoft decided to go through the QQOs (Quantifying the customer’s quality objectives) audit with Ernst & Young, which provides a measure to the non-functional requirements of scalability, reliability, security, speed, maintainability, user-friendliness and many more expectations that are crucial for a bank to benefit from a banking software deployment. All the products of Infrasoft are aligned to this standard and the OMNI Enterprise QQOs model provides the bank’s decision-makers with a realistic estimate of the total cost of ownership of any core banking deployment project.

Alliances
Infrasoft has forged strategic alliances in order to provide optimal solutions to the customer. Among the strong technology partners of Infrasoft are HP, Intel and Microsoft who have unveiled products with latest technologies. The new suite of products recently launched by Infrasoft represent the collaborative effort of all the technology partners.

The company is also a member of the Sun Developers Connection Programme and uses the Sun Solaris environment for banking e-commerce architecture. Other partners are BEA Systems (an alliance partner catering to the application server used in banking e-commerce Solutions and Oracle (for databases). Infrasoft has also partnered with Novell for Netware-based front-ends and is a commercial partner for IBM Partnerworld.

Infrasoft today is seeing multi-fold growth because it has been prescient about the demand for latest technologies. “We are going to close our books in June with a turnover of Rs 35 crore in revenue with about Rs 10 crore PAT (Profit after tax). The target for 2004 is Rs 100 crore, with about Rs 32 crore PAT,” says Tripathi. If you take a closer look at the slowdown, you will see that most companies have diversified into other areas or have shrunk to abnormally smaller sizes to sustain their business. Layoffs and other cost-cutting measures are rampant. But Infrasoft has always hired wisely and has stuck to its niche area of banking. The liberalisation policy of the banking sector posed a great opportunity for companies providing banking solutions. Players like Infrasoft have been wise enough to cash in on the opportunities and have achieved a firm footing in this sphere that is steadily maturing with the economy.