Flexcel International has signed a five-year agreement with Lord Krishna Bank (LKB) for providing centralised banking solutions based on the application service provider (ASP) model.
Flexcel will provide contractual services to LKB to enable the latter access the Flexcube centralised software from a centrally managed data centre.
Flexcel started off as a equal joint venture between i-flex solutions and HDFC Bank last year. LKB now has picked up 20 per cent stake in the company for Rs four crore. I-flex holds 40 per cent, HDFC Bank holds 29.5 per cent and HDFC Bank group firms hold 10.5 per cent in Flexcel.
Flexcel International's chief executive officer A Rajan said: "The company is looking at becoming a one stop ASP solution provider for banking related solutions. The company will provide software implementation, training and offer on-going support to banks. It will also provide an ATM switch and ATM machines on lease."
Using the ASP model for centralised banking, banks stand to bring down operational costs by around 60 per cent over a three-year time frame, he added. He said the company is in advanced talks with both old and new private sector banks.
In order to recover its costs, Flexcel plans to charge a one-time subscription cost. It will also charge a one time implementation charge per branch to compensate for consultants going to the branch. The recurring fees will be either on a transactional basis or can be charged on a branch basis.
LKB's director Karan Anand said: "As part of our strategic business model, we are looking at outsourcing our back office operations. This objective will help us optimise costs."
Adds Rajan: "By outsourcing the centralised banking solution, the clients can focus on their core banking business. Further it saves them the botheration from day to day data centre operations. Also there is no ownership risks as the bank will pay only a rental. The bank will only have to pay to the extent of usage."
LKB will go in for centralised banking via the ASP model in 45 of its 94 branches. It plans to add 25 branches every year to the centralised banking network. It also plans to lease an ATM switch from Flexcel.
LKB has earmarked an IT spend of Rs 10-12 crore in this fiscal, LKB director Ashwani Puri said. He added the bank plans to increase its ATM base to 50 by the end of the year and go in for 100 per cent computerisation by the end of the year. It also plans to add another 25 branches by the end of the year - eight in the west and the remaining in the north.
