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Canara Bank deal boosts Wipro's domestic BFSI footprint

K . Venkatasubramanian | Updated on March 14, 2011

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Winning the five-year deal from Canara Bank, coming as it does on the back of a couple of similar wins last year, suggests the deepening domestic footprint of Wipro Infotech (Wipro's Indian and West Asia arm).

It had also won a contract from Vodafone last December, indicating a broad-basing of client base across key-growth sectors.

The latest deal involves Wipro Infotech implementing Infosys' product – Finacle — towards providing core banking solutions to Canara Bank-sponsored regional rural banks. This includes Pragathi Gramin Bank in Karnataka, South Malabar Gramin Bank in Kerala, and Shreya Gramin Bank in Uttar Pradesh.

For Infosys, the deal may provide licence fee or revenues linked to usage, with fee for future product upgrades.

As this involves integration of nearly 900 branches through core banking solutions, Wipro will set up a centralised helpdesk, covering applications, data centre, networks, security and end-user systems.

The work would mean a steady long-term revenue stream for Wipro. Also, because it involves more of software implementation, margins are likely to be much better compared with purely hardware delivery-based ones.

For Wipro, this is the third such long-term deal in the five-seven-year range over the last few quarters, with the earlier ones being signed with Central Bank of India and UCO Bank.

The financial inclusion space is an ever-expanding one in the Indian context, with facilities such as mobile banking and ATMs to be provided in most rural areas by domestic banks.

Across the spectrum, even smaller players such as Bartronics and Geodesic have hopped onto this segment and won deals. Larger players such as TCS are active in the rural banking segment too.

Wipro shares gained 1.48 per cent on Monday to close at Rs 455.70 on the BSE.

Infosys Technologies too gained around the same; to end at Rs 3,099.25.

Published on March 14, 2011

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