Emerging Entrepreneurs

A brilliant conductor of banking orchestras

N Ramakrishnan | Updated on January 22, 2018

NAGARAJ V MYLANDLA, Managing Director, Financial Software & Systems

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Nagaraj Mylandla’s company helps banks operate ATMs, reconcile accounts



Nagaraj V Mylandla, 60, has traversed a long and diverse route to get where he is today. The Managing Director of Financial Software & Systems, a Chennai-based payments technology company, credits two roles he played during his school and college days in the city for his success.

One was as a senior under-officer in the National Cadet Corps; the other was as the nucleus of a cricket team that started off in the lower division in the Tamil Nadu Cricket Association league and rose to the top.

So, why these two particular roles? “NCC,” he explains, sitting in his office in Siruseri IT Park on the southern outskirts of Chennai, “helped me understand bonding with strangers and working together. You have to rough it out, sleeping in tents, in the open and what not… Those things help you to bear anything in life.”

Amar CC, the team he helped form, taught him the importance of team spirit and leadership. “Every year the captain was different. Everybody in the team was given a chance to lead the team. We did it by rotation. And everybody knew that somebody else would be the captain and we have to play the game,” recalls Nagaraj.

A graduate in Chemistry from a government-aided college, Nagaraj was a medical sales representative for a short while before joining the government-run catering institute in Chennai, which he dropped out of after a couple of weeks. “Both were not my cup of tea,” he explains.

Nagaraj then helped his father in his electrical contracting business for a few years, and learnt about the hardship of running a business — collecting bills, paying employee salaries every week, completing jobs on time and so on.

A stint in Indian Overseas Bank gave him knowledge and insights into the workings of the banking industry. Even before he started work in IOB, Nagaraj had to sign up as a member of the union. Being part of the workers’ union enabled him to learn how to handle people.

In a way, the IOB job also helped him go to the US for an MBA. When he was posted at the bank’s forex division, Nagaraj came into contact with students applying for studies abroad. That set him thinking and he decided to do the same.

The turning point

On completing his MBA from Omaha, Nebraska, he was job hunting in the US, driving a battered old Toyota and advising small enterprises on their business. One evening, he bumped into an American in a bar. That chance meeting was the turning point in Nagaraj’s life.

The person he bumped into was Gary Biggs of ACI, a company that specialised in making switching equipment for credit card payments. Biggs offered Nagaraj the job of representing ACI in India. “We got Indian Bank as the first customer,” says Nagaraj. He then teamed up with Harish Murthy to form FSS in 1991. Nagaraj bought out Murthy in 1997 as the latter wanted to concentrate on his business of selling ATMs.

Early mover

Nagaraj says long before banks in India adopted ATMs, he did a lot of business with banks in Sri Lanka, which were much more advanced at that time. After Indian Bank, other banks, too, started installing ATMs, especially after the first wave of private sector banks came in in the 1990s.

FSS had a major role to play in all of this, providing the switching technology that enables the retail payments of these banks and merchant establishments. What FSS provides is like the central nervous system for the banks, helping them operate their ATMs and reconcile their accounts without a hitch. “It is a critical role we play in the banking industry. Every bank is touched by us in some form or the other,” says Nagaraj.

FSS was there when the banks wanted to issue cards. He did not go back to ACI and ask if it would help him in issuing cards. Instead, Nagaraj got a bunch of programmers to build FSS’ own card system. “Today, it is the world’s leading card system on the debit side,” he proudly states, and adds “SBI … all the top 20-30 banks in the country use our card system.”

Nagaraj says he always had the ability to think and plan in advance. That is why he decided to take a 35,000-sq ft office on lease in a landmark IT park in Chennai even when he had just seven employees.

His team members were shocked but Nagaraj was convinced that he was doing the right thing. In the end he was proved right, so much so that FSS leased another floor in the building with the same amount of space within a short time. “If I had not invested in that, people would not have taken us seriously,” he says.

It was also at that time, in early 2000, that FSS raised its first external round of funding, from Carlyle. The private equity group also put in money in the second round.

FSS has so far raised close to ₹800 crore in four rounds of funding — from Carlyle (which has since exited FSS), NEA, Jacob Ballas and Premji Invest (in the last round).

The company now has close to 2,000 employees, with offices in Mumbai, Delhi, Bengaluru, Kolkata and Bhopal. It hopes to end this financial year with revenues of ₹850 crore. Nagaraj sees huge opportunities in the changes that are happening to the country’s banking and financial system. FSS has bagged a contract for all technology other than core banking from IDFC Bank, one of the two new banks that have been licensed by the RBI. FSS, he says, is also in talks with all the 11 payment banks that have been approved, for their technology needs.

Revenue model

FSS, says Nagaraj, gets 65-70 per cent of its revenue from outsourced deals, which are long-term contracts, and receives a fee for each transaction.

The firm is now preparing for a public issue of anywhere between ₹800 crore and ₹1,200 crore in FY17, by which time turnover would have touched ₹1,200 crore.

By then, Nagaraj expects the overseas business to also contribute substantially to the topline — as much as 30 per cent from about 15 per cent now.

Published on October 05, 2015

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