financial services ashok vemuri vice president and head – banking and capital markets ashok vemuri...
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Financial ServicesFinancial ServicesAshok Vemuri
Vice President and Head – Banking and Capital Markets
Ashok VemuriVice President and Head – Banking and Capital Markets
© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
Safe HarborSafe Harbor
Certain statements made in this Analyst Meet concerning our future growth prospects areforward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2004 and quarterly report on Form 6-K for the quarter ended June 30, 2004. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company's filings with the Securities and Exchange Commission and our reports to shareholders. The company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the company.
Slide 2
© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
AgendaAgenda
» Introduction to the Financial Services Practice
» Market overview and client imperatives
» Financial Services Strategy
» Industry Expertise
» Risk management
» Solutions and Alliances
» Integrated Outsourcing
» Benefits of our new Strategy
» Q&A
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© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
Banking and Capital Markets
The financial services industry is the largest end-user of Infosys’ servicesThe financial services industry is the largest end-user of Infosys’ services
Insurance & Healthcare
ASIA-PACIFICASIA-PACIFICEUROPEEUROPE
• Financial Services is the largest contributor to Infosys’ revenues, accounting for 34% of total revenues
• 74% of Financial Services revenues comes from North America• The Banking Business Unit develops and markets the Finacle® suite of
banking products and solutions
NORTH AMERICANORTH AMERICA
Europe Financial Services Practice
Asia-Pacific Financial Services Practice
Global AccountsGlobal Accounts
Banking Business Unit (Finacle Banking products)Banking Business Unit (Finacle Banking products)
Slide 4
© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
It contributes to over a third of company revenues and has been growing at a CAGR of 39 percentIt contributes to over a third of company revenues and has been growing at a CAGR of 39 percent
REVENUE BY INDUSTRY VERTICAL (Q1 05)
283
416
200
389
FY 02
FINANCIAL SERVICE REVENUE ($ M)
FY 03 FY 04
34.0%
15.0%
17.9%
11.4%
21.7%
Manufacturing
Financial Services
Telecom
Others
Retail
CAGR=39%
Number of active clients
Number of large clients*
$ 30 m+
$ 5 m+
Practice Strength
: 127
: 5
: 13
: 8,500
Consulting & Package Implementation
ADM
Testing and Re-engg.
Others
: 12.8%
: 55.5%: 11.8%: 19.9%
KEY METRICS REVENUE PROFILE
LTM Q1 05
Slide 5
© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
We service the complete spectrum of the financial services industry… We service the complete spectrum of the financial services industry…
TreasuryTreasury
Retail Banking & Cards
Retail Banking & Cards
Transaction BankingTransaction Banking
Corporate & CreditCorporate & Credit
Private BankingPrivate Banking
Investment ManagementInvestment Management
CustodyCustody
Depository & Exchanges
Depository & Exchanges
Diversified Financial
BrokerageBrokerage
InsuranceBanking Capital Markets
Advisory ServicesAdvisory Services
Leasing & FinanceLeasing & Finance
Benefits Administration
Benefits Administration
Trust ServicesTrust Services
Travel Related Services
Travel Related Services
Specialty FinanceSpecialty Finance Health CareHealth Care
Life InsuranceLife Insurance
Property & CasualtyProperty & Casualty
Insurance BrokerageInsurance Brokerage
Re-InsuranceRe-Insurance
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© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
CAPABILITIESCAPABILITIESCAPABILITIESCAPABILITIES
• Global Sourcing Strategy• Portfolio Rationalization• Benchmarking & Best Practices
STRATEGIC PLANNING
BUSINESS TRANSFORMATION
OPERATIONAL EFFICIENCY
RISK MANAGEMENT &
COMPLIANCE
CUSTOMER & REVENUE
MANAGEMENT
• Org-wide BPR• Post-Merger Integration• Time-To-Market Reduction
• Straight Through Processing• Claims Process Automation
(Paperless office)• Process & System Optimization • CMM & Six-Sigma Consulting
• Anti-Money Laundering, HIPAA• Trading Compliance• Basel II• Sarbanes Oxley
• Unified Customer View• Data Management• Pricing Strategy• Client Reporting
ADM & ENHANCEMENT
BUSINESS PROCESS
OUTSOURCING
INFRASTRUCTURE MAINTENANCE
BUSINESS CONSULTING
… through a suite of end-to-end business advisory and execution services… through a suite of end-to-end business advisory and execution services
SERVICESSERVICESSERVICESSERVICES
PR
OG
RA
M M
AN
AG
EM
EN
TP
RO
GR
AM
MA
NA
GE
ME
NT
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Market Overview and Client ImperativesMarket Overview and Client Imperatives
Slide 8
© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
154145
136
114
129123
WORLDWIDE FINANCIAL SERVICES IT SERVICES SPENDING ($ Billion)
The worldwide financial services industry spends about $129 billion annually on IT servicesThe worldwide financial services industry spends about $129 billion annually on IT services
Source – Gartner
FY 02 FY 04 FY 06FY 03 FY 05 FY 07
CAGR6.3%
Technology is one of the top 5 business issues for financial services CEOs
The financial services industry represents the largest market for IT Services spending worldwide
Financial institutions have been at the forefront of global sourcing both in technology as well as in operations
We are now seeing growth in all segments in this industry, due to the recovery in the US and world economy
Several other drivers are also contributing to this growth:
» The quest for competitive advantage» M&A related IT integration» Regulatory mandates (e.g. Patriot Act,
AML, HIPAA, Basel II, etc.)
The era of buying technical expertise is on its way out and that of buying business-IT expertise is emerging
Technology is one of the top 5 business issues for financial services CEOs
The financial services industry represents the largest market for IT Services spending worldwide
Financial institutions have been at the forefront of global sourcing both in technology as well as in operations
We are now seeing growth in all segments in this industry, due to the recovery in the US and world economy
Several other drivers are also contributing to this growth:
» The quest for competitive advantage» M&A related IT integration» Regulatory mandates (e.g. Patriot Act,
AML, HIPAA, Basel II, etc.)
The era of buying technical expertise is on its way out and that of buying business-IT expertise is emerging
Financial Services IT Services – Financial Services IT Services – Key FactsKey Facts
Financial Services IT Services – Financial Services IT Services – Key FactsKey Facts
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© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
Certain mega trends are driving clients strategies and expectations from service providers - THE NEW GAME Certain mega trends are driving clients strategies and expectations from service providers - THE NEW GAME
Improve customer management – increase cross-sell and reduce churn
Increased regulatory oversight – focus on risk management & compliance
Global Sourcing for competitive advantage
Growing global competition and entry of non-traditional competitors
Increased complexity and sophistication of financial products and services
Importance of scale leading to industry consolidation through M&As
Increased use of technology to deliver products and services
Cost reduction though operational improvement
Improve customer management – increase cross-sell and reduce churn
Increased regulatory oversight – focus on risk management & compliance
Global Sourcing for competitive advantage
Growing global competition and entry of non-traditional competitors
Increased complexity and sophistication of financial products and services
Importance of scale leading to industry consolidation through M&As
Increased use of technology to deliver products and services
Cost reduction though operational improvement
FINANCIAL SERVICES MEGATRENDSFINANCIAL SERVICES MEGATRENDS CLIENT EXPECTATIONSCLIENT EXPECTATIONS
Global sourcing and delivery capability critical to IT services purchase
– Deep knowledge, not just familiarity, on their industry vertical and sub-vertical
– Familiarity with market actualities
– Pure low cost strategy by itself is inadequate
Expectation of partner size and scale
– Risk Management
– Ability to scale and rapidly
– Potential for strategic partnerships
Expectation of providing an integrated operations and technology offering
Ability to provide industry-focused solutions rather than plain vanilla services
Global sourcing and delivery capability critical to IT services purchase
– Deep knowledge, not just familiarity, on their industry vertical and sub-vertical
– Familiarity with market actualities
– Pure low cost strategy by itself is inadequate
Expectation of partner size and scale
– Risk Management
– Ability to scale and rapidly
– Potential for strategic partnerships
Expectation of providing an integrated operations and technology offering
Ability to provide industry-focused solutions rather than plain vanilla services
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Infosys Strategy to meet Client Expectations
Infosys Strategy to meet Client Expectations
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© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
Our strategic response is driven by client imperativesOur strategic response is driven by client imperatives
Increase focus on building domain and process skills
Achieve partner-of-choice status through process innovation to provide low risk and high value solutions and services
Develop industry-focused services and business solutions internally or through third party alliances
Provide an integrated, end-to-end, outsourcing service
Increase focus on building domain and process skills
Achieve partner-of-choice status through process innovation to provide low risk and high value solutions and services
Develop industry-focused services and business solutions internally or through third party alliances
Provide an integrated, end-to-end, outsourcing service
OUR RESPONSE AND FOCUS 2004OUR RESPONSE AND FOCUS 2004++OUR RESPONSE AND FOCUS 2004OUR RESPONSE AND FOCUS 2004++
Global sourcing critical to IT services purchase
– Deep knowledge, not just familiarity, on their industry vertical and sub-vertical
– Pure low cost strategy is inadequate
Importance of partner size and scale
– Risk management
– Ability to scale
– Potential for strategic partnerships
Need for an integrated operations and technology offering
Need for industry-focused solutions rather than plain vanilla services
Global sourcing critical to IT services purchase
– Deep knowledge, not just familiarity, on their industry vertical and sub-vertical
– Pure low cost strategy is inadequate
Importance of partner size and scale
– Risk management
– Ability to scale
– Potential for strategic partnerships
Need for an integrated operations and technology offering
Need for industry-focused solutions rather than plain vanilla services
CLIENT EXPECTATIONSCLIENT EXPECTATIONSCLIENT EXPECTATIONSCLIENT EXPECTATIONS
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© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
Increase focus on building subject matter expertise across the organization
Achieve partner-of-choice status through low risk (and high value) proposition
Develop industry-focused services and business solutions internally or through alliances
Provide integrated, end-to-end, outsourcing services
Increase focus on building subject matter expertise across the organization
Achieve partner-of-choice status through low risk (and high value) proposition
Develop industry-focused services and business solutions internally or through alliances
Provide integrated, end-to-end, outsourcing services
We are investing in our people to build depth and breadth of industry expertise…We are investing in our people to build depth and breadth of industry expertise…
OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+ BUILD SUBJECT MATTER EXPERTISE
Emphasis on recruiting business consultants and analysts, both in local markets and India, with structured training programs delivered in-house (banking, securities, insurance)
Aggressive focus on domestic and international certifications (NCFM, Securities Institute UK, GARP, Certified Treasury Professional, LOMA, HIPAA, Actuarial Certification, etc)
Quantify various key assets from existing projects to leverage innovation and enhance capability for new initiatives
BUILD SUBJECT MATTER EXPERTISE
Emphasis on recruiting business consultants and analysts, both in local markets and India, with structured training programs delivered in-house (banking, securities, insurance)
Aggressive focus on domestic and international certifications (NCFM, Securities Institute UK, GARP, Certified Treasury Professional, LOMA, HIPAA, Actuarial Certification, etc)
Quantify various key assets from existing projects to leverage innovation and enhance capability for new initiatives
Large Investment Manager & Benefits Administrator• Conducted classroom training, offsite working programs and brown-bag
lunch sessions to build subject matter expertise• Problem solving was built into the training programs• Shared standard industry templates, guidelines, and process highlights• Also helped build a documentation library
Benefits• Rapid account ramp-up (20 times within 6
months) while maintaining & improving quality• Condensed implementation time by ~25-35%• Infosys now considered as Benefits Experts to
end-users of the client
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© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
…and are taking steps to ensure Infosys remains the highest value & lowest risk provider…and are taking steps to ensure Infosys remains the highest value & lowest risk provider
Increase focus on building subject matter expertise across the organization
Achieve partner-of-choice status through low risk (and high value) proposition
Develop industry-focused services and business solutions internally or through alliances
Provide integrated, end-to-end, outsourcing services
Increase focus on building subject matter expertise across the organization
Achieve partner-of-choice status through low risk (and high value) proposition
Develop industry-focused services and business solutions internally or through alliances
Provide integrated, end-to-end, outsourcing services
OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+ RISK MITIGATION FOR CLIENTS
Leverage multiple world-wide and Indian locations to mitigate geographical concentration risk
Appointment of Chief Risk Officer for key accounts
Disaster Recovery and Business Continuity plan for all accounts
RISK MITIGATION FOR CLIENTS
Leverage multiple world-wide and Indian locations to mitigate geographical concentration risk
Appointment of Chief Risk Officer for key accounts
Disaster Recovery and Business Continuity plan for all accounts
Leading US Retail and Investment Bank• Appointed a Chief Risk Officer for the account• Conduct semi-annual Business Continuity Planning exercise • Conduct external & internal audits to asses information security risks• Quarterly review of Gramm Leach Bliley compliance• Compliance with BS7799 security standards
Benefits• Infosys now ranked as the lowest risk and
highest value service provider• Significant reduction in account risk leading to
faster adoption of outsourcing• Business has grown by more than 240% in the
last 1 year
Slide 14
© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
Our response is a solutions-led strategy that will quickly address common business and technology problems for our clientsOur response is a solutions-led strategy that will quickly address common business and technology problems for our clients
Increase focus on building subject matter expertise across the organization
Achieve partner-of-choice status through low risk (and high value) proposition
Develop industry-focused services and business solutions internally or through alliances
Provide integrated, end-to-end, outsourcing services
Increase focus on building subject matter expertise across the organization
Achieve partner-of-choice status through low risk (and high value) proposition
Develop industry-focused services and business solutions internally or through alliances
Provide integrated, end-to-end, outsourcing services
OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+ DEVELOP INDUSTRY-FOCUSED SOLUTIONS
Solutions comprise process know-how, domain and industry expertise and strong technology competency
Solutions have been identified after extensive client validation (Exceptions Management, AML, Claims Process Automation, etc)
Forged alliances with established and emerging technology vendors focused on this industry
DEVELOP INDUSTRY-FOCUSED SOLUTIONS
Solutions comprise process know-how, domain and industry expertise and strong technology competency
Solutions have been identified after extensive client validation (Exceptions Management, AML, Claims Process Automation, etc)
Forged alliances with established and emerging technology vendors focused on this industry
AML Solution for a Leading Investment Bank • Leveraged engagement experience to develop solution for Anti-Money
Laundering• Partnered with leading AML technology provider – Mantas• Conducted training programs on regulatory compliance and AML to
build expertise
Benefits• Significant traction on regulatory compliance
engagements• Compliance solution has attracted higher
margin consulting & solutions business
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© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
We are also redefining our established outsourcing model to offer a seamless IT & Operations offering to our clientsWe are also redefining our established outsourcing model to offer a seamless IT & Operations offering to our clients
OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+OUR RESPONSE AND FOCUS 2004+ INTEGRATED OUTSOURCING
Integrate Technology & Operations at the strategic, operational and tactical level using our GDM to ensure long term value
Strategic Level At the Board level to capture value and
provide direction Operational level
• Change Management and Organization changes to facilitate integration
Tactical Level• IT Awareness of Operations• Process Application Clustering• Innovation Management
Integrated service offering with Progeon
INTEGRATED OUTSOURCING
Integrate Technology & Operations at the strategic, operational and tactical level using our GDM to ensure long term value
Strategic Level At the Board level to capture value and
provide direction Operational level
• Change Management and Organization changes to facilitate integration
Tactical Level• IT Awareness of Operations• Process Application Clustering• Innovation Management
Integrated service offering with Progeon
Increase focus on building subject matter expertise across the organization
Achieve partner-of-choice status through low risk (and high value) proposition
Develop industry-focused services and business solutions internally or through alliances
Provide integrated, end-to-end, outsourcing services
Increase focus on building subject matter expertise across the organization
Achieve partner-of-choice status through low risk (and high value) proposition
Develop industry-focused services and business solutions internally or through alliances
Provide integrated, end-to-end, outsourcing services
Leading mortgage and investment products firm• Client wanted to reduce its total cost of loan servicing operations• Infosys recommended IT & process improvements in loan servicing
operations including redesigning and implementing several applications ( loan origination, reporting & workflow and customer service)
• Progeon provided mortgage back office functions such as loan servicing, financial accounting and customer support
Benefits• Client ramp-up of over 300%• Savings of more than $5 million a year for
client• 100% increase in transactions handled per day• 70% improvement in rate confirmation
turnaround time
Slide 16
© Infosys Technologies Limited 2004-2005 Analyst Meet 2004 | New Game. New Rules.
The structure for the next generation company-the new rules of the new game. The structure for the next generation company-the new rules of the new game.
Global Majors
• Next Generation GDM– Seamless delivery– Scalability
• Solution-led Selling
• Deep Industry Knowledge
• Client Engagement & Account Mgmt
• Process Maturity
• Talent Attraction & Retention
Offshore Players Infosys
Weak
Very Strong
Ex
ec
uti
on
Ab
ilit
yIn
du
str
y C
om
pe
ten
ce Ex
ec
uti
on
Ab
ilit
y
Industry Competence
High
Low
High
Global Majors
Infosys
Offshore Players
“Over the years, [Infosys] has developed the domain expertise to service the financial services community and offers support for such core business responsibilities as asset management, investment banking, brokerage services, risk management and custody and clearing.” –Waters Financial Publication
Slide 17
Thank YouThank You