TCS’s IT background, and the support of its multi-billion-dollar parent conglomerate Tata, enables it to provide vertically integrated solutions across a number of platforms. Chiara Francavilla reports on the consultancy’s recent successes
Tata Consultancy Service (TCS) is one of the many branches of the USD83bn Indian conglomerate Tata, and a branch that keeps growing, with a 38% year-on-year increase in profits in the first quarter of 2012. Multiservice provide TCS has businesses in several industries. Among them, there is a section devoted to offering financial services, TCS BaNCS.
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Inside this unit, there is another level of Tata’s gigantic matryoshka – its payment solution unit, developed in the early 2000s. Unlike the surrounding multifaceted business, the payment unit has specialised on one aspect of the payment industry: providing payment solutions to banks and financial institutions.
"The TCS BaNCS payment solution focuses very specifically on payment instructions between banks and payments between banks and their customers," Nitin Sirohi, global product head of payments at TCS Financial Solutions told Electronic Payments International.
Sirohi summarised the services provided by TCS Payment Solutions: centralised payment platforms for banks and financial institution, which enable bank-to-bank and bank-to-customers transactions, providing back-office and middle-office services. TCS also provides payments hubs to corporate or financial institutions. The hubs allow payments to be processed in multiple currencies and languages.
TCS also has a range of front-office processes, which allow institutions to relate to their customers using a number of platforms, including mobile and online solutions.
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By GlobalDataIn terms of payments, TCS entered into a small but highly lucrative market. Banks regard payments as one of their most precious assets, and are willing to spend significant amounts to assure the best service provision. Also, contracts are usually multiyear, to avoid the costs and problems related to frequent changes of service provider. As a result, deals in this specific sector of the payment industry are few but highly priced.
TCS secured a significant one in September 2011, when it became the service provider of Europe’s largest bank by assets, Deutsche Bank. The company was selected to provide software solutions, a global service desk, service operations and all the bank’s other IT services across seven countries: the US, the UK, Germany, Hungary, Philippines, Singapore and India.
TCS announced it as a five-year, multimillion-dollar deal, but did not disclose further details.
Outside Europe, TCS is involved in partnerships with large financial institutions in emerging markets. In August 2012, TCS signed a deal with Ziraat Bank, Turkey’s largest bank by assets. Ziraat Bank handed TCS the task of powering its international banking operations, for an undisclosed amount.
Yunus Uygur Kocaoglu, general manager at Fintek, Ziraat Bank, said: "With [TCS’s] high-performance, flexible, integrated solution, we are looking forward to catering to dynamic and local customer requirements across multiple geographies in a standardised manner. TCS brings an established track record of multi-country implementations and we are delighted to leverage that global track record in a fruitful partnership."
In March 2012, TCS partnered with Malaysia’s fifth-largest bank by assets, AmBank, to replace its core banking engine. Cheah Tek Kuang, group managing director of AmBank Group, said TCS had been chosen as considered capable to provide a "technically robust and functionally rich core banking system", both for their conventional and Islamic banking arms.
"Among the many criteria that were evaluated were TCS’s implementation experience across multiple markets, the high satisfaction levels of TCS BaNCS customers, and TCS BaNCS’ commitment to relevant product development and extensive support," he said.
On this occasion as well, the terms of the deal were not disclosed. In others, it was the name of the partnering bank not to be made public. In December 2010, TCS announced that it had entered into an agreement with an unnamed Indian bank. The three-year INR850m (USD16.23m) deal included the provisions of smart-card and biometric technology based financial inclusion solutions, which would allow the bank to reach 3.5m unbanked individuals in India.
In 2007, TCS was one of the first Indian companies to tap into China, signing a USD100m contract with the state-run Bank of China.
TCS BaNCS may not have a history as an established payment solutions provider, which some banks may prefer to handle their payments activities. However, by coming to the payment industry from an IT starting point, TCS can provide flexible and customised solutions to its clients.
Also, by leveraging on the ramified business it belongs to, TCS can offer solutions spanning a variety of platforms, from online to mobile, giving banks the tools to respond to the emerging multimedia customers’ demands.
According to Sirohi, another feature that makes TCS’s payment solution different from others is the provision of vertically integrated services across the spectrum of implementation, reducing the need to contact different providers.
"In our view, one of the biggest issues for firms are the exaggerated costs that stem from having many vendors supporting the enterprise. We do our own implementations instead of having to rely on outside system integrators, which would otherwise introduce a level of complexity," he said.
According to Sirohi, TCS is willing to invest in expanding the business, both in terms of geography and product offer. One of the latest upgrades was the release in September 2011 of TCS BaNCS Core Banking Version 12. The new version offered enhanced multi-entry support enabling cross-border and cross-entry customer transactions and an International Financial Reporting Standards engine, designed to perform calculations for effective interest rates, fair valuation on estimated and contracted cash flows, impairment of assets.
TCS seems well equipped to face the emerging banks and customers’ demands in terms of payments, where the line of discrimination among providers is set to be on speed, with the possibility to move on multiple platforms.
