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With
India emerging as one of the fastest growing markets for Intel,
the company has chalked out a strategy for addressing the
banking and finance vertical here, now controlled by RISC
vendors. Pankaj Mishra analyses Intel’s strategy against the
backdrop of competition it faces from Sun Microsystems and
IBM
Analysts
believe that the banking and financial services industry (BFSI)
accounts for more than 20 percent of IT expenditure worldwide,
and a similar trend is expected to have emerged in India.
In 2000, the overall size of the BFSI industry in India was
estimated at Rs
91,000 crore. “India is a big market for us, especially
the financial services market, which is growing exponentially.
We have formulated a ‘go-to-market’ strategy along
with i-flex, eLind and Financial Technologies,” says
Howard Morin, global finance solutions manager, Intel. However,
Vishal Dhupar, director sales, Sun Microsystems India has
a different view: “During the last financial year, RISC-based
solutions were preferred for all ten projects in the financial
services segment, of which eight were bagged by Sun. IBM clinched
two deals.”
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Intel’s
Morin claims that even Indian stock exchanges
are evincing interest in Intel’s offerings in this space |
Realising
that making an impact on the BFSI sector in India is an uphill
task, Intel has partnered with Compaq and Microsoft to launch
the ‘Keystone programme’ aimed at the finance vertical.
Keystone offers solutions in the areas of core, branch and
Internet banking and capital market solutions, including Internet
trading, straight through processing and next-day settlement
applications.
The changing dynamics in the Indian financial market have
prompted several institutions to look at scaling up their
services. This has resulted in a boom. “I have been meeting
several clients in the country and everyone is aiming at reducing
the cost of customer acquisition. Some stock exchanges in
India have also evinced interest,” says Morin.
Intel has partnered with i-flex for getting core-banking apps
delivered on the IA platform. Financial Technologies has been
roped in for offering investment-banking solutions. “Intel
is a compelling proposition in the Indian financial services
market today and we plan to leverage on that. On the engineering
side, we are sharing domain expertise with alliance partners
and Intel is helping us in our go-to-market strategy,”
says Senthil Kumar, head, corporate marketing, i-flex solutions.
Intel has installed IA-64 machines at i-flex so that the company
can optimise its solutions for Intel-based machines.
HDFC Bank is one of the early customers for i-flex’s
solution based on IA-32. Intel’s much hyped 64-bit server
processor, Itanium, is yet to find any takers. “As of
now, IA-32 is more acceptable in the market, but after April
2002, we see IA-64 gaining ground,” says Kumar. He adds
that two deals on the Intel platform are about to be signed
in the core banking segment. What is interesting to note is
that i-flex also happens to be Sun’s partner as part
of Sun’s iForce programme. Moreover, Sun also has a close
relationship with Infosys, whose Finacle banking solution
addresses the same segment.
Can Intel pull it off? The biggest worry for Intel is Sun
Microsystems, which is now moving aggressively with its solution
partners in the BFSI segment. Presently, RISC-based servers
dominate the market, with vendors like HP, Compaq, IBM and
Sun offering non-Intel boxes. “Sun is a virtual leader
in the financial services segment. We started tapping this
segment in the early eighties and our early lead was established
in the securities space,” says Dhupar. Sun’s clients
include HDFC Bank, ICICI Bank, UTI, IDBI Bank, and more recently,
Punjab National Bank.
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Sun’s
Dhupar claims he hasn’t come across a single institution
that wants anything other than RISC systems |
The
opportunity for Intel lies in the Internet banking segment,
especially in retail and corporate banking. Pressure is building
up on banks to invest heavily in online banking, and recent
research says that ten percent private bank customers will
use online services by 2005. Banks such ICICI Bank and HDFC
Bank, who are facing competition from MNCs like Citibank have
scaled up their existing infrastructure to move services on
to the Internet. And now, the PSU banks are also getting on
the Internet banking bus, with players like Bank of Baroda
leading the way. Intel has also invested in some niche companies
like eLind and Trivium who can play an important role in getting
apps delivered on Intel servers.
The challenge for Intel is to establish its presence in the
core-banking segment, where RISC is still preferred. “Today,
most banks in India are worried about mergers and acquisitions.
They are focussing heavily on core banking and I have not
come across a single institution that wants anything other
than RISC for running its core-banking applications,”
claims Dhupar.
While Intel has a coherent strategy of moving with its solution
partners, it will have a difficult job on its hands in convincing
banks to shift from their traditional RISC hardware and Unix
software. With Itanium not expected to pick up until the next
fiscal, it definitely seems like it will be a daunting task
for Intel to break into the Indian financial services market
today. After Itanium picks up however, it might be a different
story.
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