Canara Bank to spend Rs 125 cr on core banking

Canara Bank, which aims to implement a core banking solution to coincide with its centenary year that starts in July, will choose from three vendors to supply the package, senior bank officials told Business Standard.

"All of them are eligible and we should have a decision in a couple of weeks," they said.

On the short list are Infosys, with its core banking product Finacle that would be implemented by fellow IT services firm Wipro; i-flex, with its product Flexcube that the company would implement with partner IBM that would also supply the hardware, and Hewlett Packard.

The winning combine will walk away with a contract worth "at least Rs 125 crore", a senior official said.

"This doesn't include the bank's IT spend on maintenance... the estimate is an independent one for the core banking project alone." What the bank wanted was, for the system integrator to "bring in everything", from supplying hardware to running a pilot in a few branches to achieve the customisation required by the bank, setting up a data centre and a disaster recovery centre.

The data centre would be set up in Bangalore, while Mangalore had been chosen as the disaster recovery site. In addition, "We are also buying a customer resource management package and an anti-money laundering software package," the officials said.

On Monday, V P Shetty, the bank's chairman and managing director told reporters here, "by December 2006, we aim to roll out the core banking software to 1,053 branches."

The implementation of the core banking software will also mean Canara Bank can use the Internet as an additional channel for its retail products.

"Today we only provide information on the products on our website, but this will allow us to use the net as another distribution channel," bank officials said.

Canara Bank also sells life insurance products for Aviva Life Insurance company and on Monday, it announced a tie up to sell United India Assurance's non-life products. Last year the bank spent close to Rs 100 crore, maintaining its existing IT infrastructure.

Globally, banks will spend some $155 billion (Rs 700,000 crore) in 2005 on IT, estimates analysts firm Tower Group. Financial services as a whole is estimated to spend some $365 billion on IT, the firm estimates.