Small Banks Turn To Open Source Solutions To Cut Costs

Co-operative banks and newly-licensed ones are increasingly adopting open source and cloudbased solutions as they look to bring down costs.  More than 1,000 banks will implement these core banking solutions by the end of the year. Bandhan Financial Services, among the latest to get a banking licence in India, is likely to choose FIS Global's application called Profile, which is built on an open source database system, sources told ET.

ING Vysya Bank, which recently upgraded its core banking solution, also picked Profile. Last November, FIS Global won the Bharatiya Mahila Bank deal as well.  While the country's large banks have already invested in core-banking systems, this is an important year for banking technology in India. About a thousand urban co-operative banks are yet to migrate to a core banking system and are likely to choose hosted solutions on a pay-as-you-go basis.

As of March, only a third of 1,589 urban co-operative banks that have been told by the central bank to migrate to a core banking system have done so. The rest of the market is up for grabs.  "Open source-based products, which could bring down the total cost of ownership, have become a credible alternative for decision makers," said Aniruddha Paul, CIO of ING Vysya...