• In Conversation

Entrepreneur (E): Perhaps every Indian has heard or read about Infosys. But very few know about Finacle. Could you tell us the story behind Finacle and it’s subsequent growth?
HARAGOPAL MANGIPUDI (HM): Finacle was launched in June 2000, after we phased out Banks 2000. Finacle is 10 years old, but we have grown significantly, today we are in 73 countries, with 140 customers across six continents. The core strength of Finacle is the 6,000 people it employs. Infosys was always ambitious on product side and started the whole product thing in the late 80’s to 90’s. That’s when Banks 2000 was started. Today the whole offering of Finacle has become much broader. We have an assortment of universal banking solutions.
From core banking, internet banking, internet retail, internet corporate, Islamic banking, rural inclusion, to mobile banking, et al. We see this as an opportunity for banks to grow and bring in efficiency. We cater across a segment of banks from Tier 1 to Tier III cities and are present both domestically and internationally. We’ve been very successful as product story from India in software space. We currently have 290 million end-customers using Finacle, which is about close to 390 million accounts, and 47,000 branches.

E: You have entered into the mobile banking space in a big way. What was the opportunity you saw here?
HM: We look at all spaces where banks see an opportunity and can really make an impact with technology. When we launched Mobile 1.0 it was purely transaction based. Mobile 2.0, launched in November 2010, is a paradigm shift, as it is complete relationship oriented as against transaction based. The whole idea is that if customer X goes to a shopping mall and wants to know if he can buy a product which costs Y amount of money, he needs to know, the amount available in the bank account to buy the product along with a complete view of account, cash flow, how many assets, liabilities, and if an equated monthly installment option is possible. The idea is to take a relationship view and give complete control to the consumer than to the bank.
Plus, we are bringing in advancements in terms of device independence. Roughly about 8,000 different devices can be supported with our technology, right from the most basic to the most advanced smart phones.

E: In your opinion, what are the further opportunities for entrepreneurs in space of mobile payments and banking?
HM: Today, there are many players writing applications for mobile phones, which will definitely continue, according to me. There is an opportunity for smaller entrepreneurs to piggyback on bank services without having a full fledged banking application. The whole collaborative space, on mobile platform per say, is an opportunity, whether it be a generic application or for a specific segment.

E: What do you think are going to be the differentiators for Mobile Banking 2.0?
HM: It’s a generation different from normal mobile banking, as it does not look at only the transactional side, but also the relationship side. Then, it’s also device agnostic platform. In a market like India, all levels of economic strata are adapting mobile banking. Third, when you are using any mobile, my product must render to the richness of that device, while the product should also be able to leverage the features of each device.
Security is a big criterion too. Going forward in our global market, we have opportunities like cheque truncation. In some countries, I can take a picture of a cheque and send it to bank; just an image is good enough. It’s called remote deposit capture and today it’s happening at a bank level. Fundamental shift for me is the move from transaction to relations. You can actually open an account using your device; very different and very state-of-the-art.

E: What does it take to build a successful product in software space?
HM: If I have an idea, I can get a product out to the market and funding as well. However, in my experience of over 20 years in the product space, you need much more than an idea and funding to be successful. First up, having a robust architecture is important. When I develop an application, I should look at number of users and the kind of concurrency it can generate. Even if your product is the best, it may not sell on its own, and thus branding is important.
Then I’d say customer advocacy is critical too. Ultimately no one sells by advertising alone; understanding customers’ needs, as well as the micro and macro requirements of customer segment is important. Next up, I’d list delivery excellence. Unless all the features of a product are used and deployed well its futile. Especially, when developing large enterprise applications.
The eco-system is equally important. For a product company it’s important to take care of an eco-system. Lastly, I’d say funding. However, without the before mentioned aspects, it’s not easy to create a successful product company. Infant mortality rate of product companies in India is high. The brand concept for products has still not sunk in with Indian products vendors; the concept that one needs a larger canvas of architecture has still not been understood either. Plus right customers, planning and delivery is important.

E: What are your comments on the Indian entrepreneurial eco-system? Has it matured or is there some way to go?
HM: The eco-system is not developed. The US market is forgiving, as there no stigma associated with initial failures. In India, though, that’s not the case, but its changing slowly, with expatriates here now as well as young graduates from IIT’s and IIM’s starting ventures. It’s a lot better now, but for a software eco-system of our size, the product export revenue is still small.
There is a lot more opportunity for us to build here. The idea is that you need to stay invested, because products are a deep pocket game, but not in terms of money. Your investment and returns will not be in the same cycle, there will be a phase back but you’ve got to manage. Not only terms of revenues but also engaging your employees, as they need to stay connected and motivated. Your product will not sell 20 million licenses over night!

E: Where do you see the Indian IT sector growing this decade? Will we see more products versus services?
HM: Yes, I think so. There is a lot of maturity in the market now. Clearly, standardization is the primary driver for products. When you are able to standardize all requirements, that’s when products emerge. Products are not one single universe; there are multiple types, from simple, small applications to large complex ones.
Depending on the nature of opportunity, my sense is that we will be a lot more successful in business applications because of the proximity with services space, as well as content richness. I won’t be able to predict which verticals will have more products, but I do believe this decade you will see more product companies.
However, what will count is how many can touch Rs.10 crore in revenues, that’s when people’s perseverance and continuity will matter. It’s a long gestation period and entrepreneurs must realize that.

E: What is your advice to entrepreneurs in software space? Especially to those trying to break into the products space.
HM: Consider all the basics I mentioned earlier. Think big! Your architectural blue print should survive on a larger level, look at your customer domain, stay close to the customer, and make sure you deliver excellence. Make sure you have a broader pyramid of employees and eco–system to support you. You can’t do it all alone. At startup stage itself, entrepreneurs must strive to have a smaller share of a larger pie than vice-versa. A startup’s biggest challenge is reach, so if you are able to piggyback in the early days and share the successes with someone who can be a production shop, it will help you in long run. Also, make sure where ever you go for funding that they understand the intricacies of your venture.

©Entrepreneur October 2011

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finacle, haragopal mangipudi, Infosys, infosys technologies, IT sector, Shonali advani