It's time for BFSI to use IT effectively

Despite the fact that the current slowdown has been throwing up challenges in the global market for the Banking, Financial Services and Insurance (BFSI), it is seeing continued opportunities.

Akhil Agarwal, vice president and global head (BFSI), Virtusa Corporation, a global information technology services company providing IT consulting, technology and outsourcing services, talks on the current scene in BFSI and the initiatives by Virtusa in this regard.

Innovation, transformation and improvement in efficiencies are believed to be the core of a successful BFSI business. How far have companies in this domain come in the present-day business environment?

The key differentiator from one company to another is the ability to bring new products to the market faster and at a lower cost. The only way to achieve this is to constantly innovate and use IT effectively to bring in efficiencies.

Although significant progress has been made in the sector in IT adoption, there are still many companies working on siloed applications/departments and are not leveraging the benefits of technology in the true sense. For example, today I have different touch points for my regular savings account, home loan, and a car loan with a financial institution – very inefficient way to deal with a client. It does not allow the institution to do any cross sell or up sell in a timely fashion due to lack of visibility.

What are the most exciting processes about BFSI, from the corporate side and from a user's point of view? Can you elaborate on Virtusa’s expertise in the BFSI domain?

Today, most of the companies capture enormous amount of data from the customer and from the market. The ability to use this data effectively in its core processes to drive customer delight and improving its market share is the most interesting and exciting change.

One interesting process that I saw in action recently was the exception management in credit card space. During a recent trip to one of the Asian countries, I used my credit card to pay a hotel bill which was much higher than my usual transactions. Within a minute of my swiping the card I got a call from the call center verifying the transaction. From a user’s perspective, it gave me lot of comfort feeling that somebody is protecting me from misuse and at the same time it benefited the corporate in getting fraudulent charges.

Virtusa has been helping clients from the banking, financial services and insurance industries to innovate, transform and improve efficiencies. Our productization methodology combined with deep industry skills help financial institutions address business needs and achieve positive, measurable ROI. Virtusa’s BPM and SOA expertise help provide a consistent enterprise view, facilitate transformation, bring best practice workflows and increase operational efficiency.

Our deep experience working with Fortune 500 financial institutions and industry-leading software vendors provide a unique advantage to cross-leverage skills and best practices. Some of the leading retail and wholesale banks, card services, lending firms, investment banks, securities traders and brokerage firms have partnered with Virtusa to conceive, transform and optimize software platforms to meet their business imperatives.

Further, Virtusa also assists leading software companies in the areas of BPM, cash management, online customer self-service, enterprise content management, and banking and payment technologies, with product conceptualization to implementation, custom implementation and support.

BFSI operations are currently hit by the global recession. What has Virtusa done in this regard to keep things afloat?

We have been able to leverage our deep technical expertise along with domain focus to relate to client’s core business processes. This approach has gone well with not only IT managers but also has resonated well with the business managers.

Would you consciously reduce your exposure to this vertical?

We have made investments in our people and our planning with respect to the BFSI sector, and believe that the BFSI sector will remain part of our overall focus and go to market strategy.

How important has the domestic marketplace become to you in a situation when the US and Europe are reeling under the recession?

New geographic markets as an alternative are a good way of de-risking. The Asian markets including India also offer opportunities within the well established financial services industries across banking, insurance, wealth management and compliance/regulatory solutions.

How do you see the growth of BFSI sector in the domestic market?

I personally think there is continued opportunity within the BFSI sector domestically, in spite of the current challenges in the global market. For example, life insurance penetration in India is at 4 per cent currently and it presents opportunities for many companies to expand their client base.

Similarly, many financial services companies have started to offer wealth management services. I believe all of this demand will drive significant changes in the existing IT applications to support client needs in the near future. Local companies will have to compete with global players with better systems and IT infrastructure.

What initiatives are you taking to enhance your presence in the global market?

We are continuing to systematically leverage our transformational services to enable our clients to launch new products and services to market faster, reduce their overall IT costs and greatly improve their end-customer experience. Further, we continue to focus on programs related to marketing, client relationships, and enhanced service offerings, among our initiatives.

Globally, recession has squeezed budgets for many CIOs who wished to invest in new technologies. Do you see slowdown getting reflected in your results?

Globally the economic environment is going through difficult times. Irrespective of the industry or business a company is in, these challenging times will have an impact on their customers. We are aware of these challenges and have a compelling value proposition to meet them.

How has been the journey for Virtusa till now and how does it look at the future?

Founded in 1996, Virtusa during the initial years focused on outsourced product development (OPD) helping ISVs in product engineering, quality assurance and support. Over the years, Virtusa has played a key role in delivering world-class products for leading software companies across the world.

By 2002, with the need to expand and diversify, Virtusa started focusing on the IT services market, beyond the traditional OPD market. The results were striking. For the fiscal year ending 31 March 2008, Virtusa’s revenue was US $ 165.2 million and operating profit was $19.4 million.

Based on this fiscal year-ending revenue, the company has registered a compounded annual growth rate of 46 per cent for the previous five years. In August 2007, the company was listed on NASDAQ. With delivery centers in Hyderabad, Chennai and Colombo, the company serves Global 2000 clients across BFSI, telecommunications and media & information industries.

We believe our compelling differentiation, strong relationships and an outstanding track record of service excellence across our clients will continue to resonate, even in difficult economic times.

Changing environments call for new strategies to stay on top. What are the strategies that Virtusa has been readying when slowdown threatens to be even tough in the coming days? Have your earlier strategies paid off in a big way?

In today’s tough economic conditions, businesses are exploring ways to optimize their operations by improving efficiencies and reducing costs. Virtusa’s offerings and capabilities are supportive of these types of initiatives. Much of this is a direct result of our differentiated value proposition of consultative platforming approach, deep industry expertise and our enhanced global delivery model, which enables our clients to improve their internal efficiencies, accelerate the launch of new products and services to market and reduce their overall costs.

How is the IT services business doing, in the background of a perceived slowdown in the IT sector?

We are in a period of economic uncertainty and turmoil, with most of the businesses and industries affected by it. The IT services market will be impacted to some extent as its clients across industries will re-look at their future plans. However, in spite of the threats, there are opportunities for IT services providers to benefit from.

For example, the focus for clients in these trying times would be on reducing costs, improving operational efficiencies and investing in innovations. Global delivery models are continuing to effectively meet these needs.