Nucleus Software - Annual Report Summary
An Intelsense Knowledge Series - we regularly study interesting businesses. We keep profiling them. The idea is to keep learning and expanding our knowledge base.
About the company:
Nucleus Software is the leading provider of lending and transaction banking products to the global financial services industry. Its software powers the operations of more than 200 customers in 50+ countries, supporting retail banking, corporate banking, cash management, internet banking, automotive finance and other business areas.
Nucleus Software operates through integrated and well-networked subsidiaries in India, Japan, the Netherlands, Singapore, the USA, Australia and South Africa. In India, 40 lakh crores worth of retail assets are managed on their software.
Business offerings:
FinnOne Neo:
This suite is a product which offers an end-to-end solution for lending businesses. The product has the following:
Customer Acquisition System: It covers the entire customer onboarding evaluation process for retail and corporate customers, with a multi-channel front end and a solid credit process back end.
Loan Management Systems: It takes care of the entire servicing life cycle of a loan including accounting, repayment, special transaction, non – performing asset management and self–service through multiple channels.
Collections: This module optimally manages defaulters and possible defaulters efficiently managing NPAs.
Enterprise Content Management: This provides image-based processing capabilities to store and retrieve various contents like document images, letters, communications, etc.
Collaterals Management System: It takes care of the entire collateral life cycle management. The sales assist is a specialized loan sourcing channel for sales staff empowering them for super quick and easy loan sourcing.
Mobility Apps: It is a portfolio of mobility solutions aimed at creating end customer empowerment while digitalizing various lending business processes. The apps include mCAS, mApply, mCollect, mServe, and mFin.
API Center: In the increasingly digitized world, the integrability and compatibility of a software solution with other software solutions are becoming very difficult. The product in discussion has been a front runner in this regard as this carries an incredible number of APIs – 470+ APIs that facilitate robust, secure, easy, quick and agile integrations. The product supports both cloud, hybrid and on-premise deployments and can be deployed quickly in partnership with leading cloud providers.
FinnAxia:
This suite is another product of the company. It is an integrated global transaction banking solution built on the latest Java J2EE technology and Service Oriented Architecture (SOA) platform. With this product suite, banks can break down traditional product silos, launch personalized products/services over multiple channels and create winning corporate customer propositions. The key product components of FinnAxia:
Global Receivables: It enables banks to provide comprehensive accounts receivable management solutions for managing inflows efficiently. Receivables can be paper-based (Cheque / Draft / PDC), electronic (direct debit) or cash. Bank may provide faster fund availability with the option of guaranteed credit against the cheque based on the arrangement between the bank and corporate.
Banks can offer tracking of corporate receivables by capturing invoices and reconciliation of the same with all the payments received, both paper and electronic. FinnAxiaTM Bill Collection solution enables banks to collect on behalf of corporates by integrating with their ERP for fetching bill details.
Global Payments: It is a value-enhancing payments solution to enable banks to handle low and high-value inter and intra-bank payments of their corporate customers, supporting instantaneous settlement that can be processed 24x7.
The solution is designed to help corporates streamline automation, improve operational efficiencies, gain greater cash visibility, comply with regional and global regulations, and reduce operational risk and cost during payment processing.
Banks can process cross-currency payments using multiple rate types and maintain tight control of the rate at which these payments are processed.
Global Liquidity Management: It gives banks the power to manage the cash positions of their corporate customers on an international basis resulting in better utilisation of available funds and reduced interest costs through short-term bank borrowings. It automates all transactions, interest & tax calculations and manages a registry of intercompany lending/ borrowing history and limits for the corporate entity.
Financial Supply Chain Management: It offers an integrated way of managing invoice presentation and transaction processing across a corporate’s supply chain, covering its suppliers and dealers. FinnAxiaTM e-FSCM provides a 360-degree view of the financial supply chain ecosystem with an end-to-end credit line and transaction tracking.
FinnAxia Business Internet Banking: It is the Internet front end for the bank’s corporate customers to access various cash management features over the Internet. It facilitates the customers to initiate, authorize, release for processing, track, and view reports etc. for all transactions across all modules and features offered to customers by the bank. This product helps banks to create new revenue streams through a wide range of segmented and personalized offerings.
E-Trade Finance: It provides the corporate customers of banks the flexibility to digitize their trade finance service requests via trade products like letters of credit, bank guarantees, import-export financing, standby letter of credit, shipping guarantee and import-export bills for collection.
Advance Virtual Treasury Management: It enables banks to offer transaction processing and manage corporate liquidity using virtual accounts. It can help corporates rationalize their operating accounts landscape by reducing the number of required physical accounts and optimizing cash flows. It enables banks to set up on-behalf-of structures (POBO/ ROBO) for their corporate customers. It provides self-service options to its customers allowing faster deployment and more convenient control of virtual accounts
FinnAxia 8.5: It enables corporates to make informed decisions on their cash position via an integration solution. It enables cash forecasting capabilities for the banks’ corporate customers and provides enriched MIS.
PaySe:
The world’s first online & offline digital payment solution was created with the aim to democratize money.
Nucleus Solutions Services:
The services division of Necleus Software plays a crucial role in the digital transformation of organizations by delivering seamless customer experiences, operational and cost efficiencies and actionable insights.
This division leverages a broad spectrum of disruptive digital services like Cloud services, Application Modernization, Data Engineering/ Virtualization and Analytics, Robotic Press Automation, Infra Services and more.
This service wing has operations in India, South-East Asia, Japan, the Middle East & Europe.
Achieved 86.5% operational efficiency by implementing, Robotics Process Automation for a top Japanese NBFC for their identity and access management processes.
Accomplished Process Automation of the Risk Evaluation Management System for a large regional bank in Europe.
Facilitated the digital transformation of a large Asian bank by developing open banking APIs as per the central bank guidelines.
Nucleus was hit by a cyber breach attack in FY 21- 22:
Comprehensive actions have been taken which include the below:
§ Enhanced security for VPN
§ Next Generation Firewall
§ Focus on Network Security
§ Multi-Factor Authentication across the enterprise
§ Comprehensive AV Guard
§ End Point Detection and Response (EDR) solution
§ Setting up of 24X7 Security Operations Centre
§ Enterprise mobility and Microsoft 365 Security
§ Engaged Retainer Services of the world’s leading Cyber Security Expert Organization
§ Comprehensive background verification is carried out for their associates.
§ Continuous awareness sessions are arranged for our associates advising them about the fast-evolving challenges and risks related to Cyber and Info Security. This is also backed by comprehensive and continuously enhanced processes and practices, tools, and platforms.
Intellectual Property:
The company has been given 2 patents recently for their Offline and Online Financial Inclusion Platforms. It was developed as a financial inclusion enabler to address the significant challenges that banks and financial institutions face in providing financial services to the people at the bottom of the pyramid.
This solution is capable of carrying out transactions in completely offline mode and addresses all the challenges faced by consumers in rural areas, such as financial literacy, lack of internet connectivity, lack of mobile phones, and commute to bank branches.
Industry Structure and Development
The technology industry has played a pivotal role in shaping the global and Indian business landscape. It has not only enabled companies to maintain operations but also facilitated their adaptation to dynamic market forces and evolving customer needs.
In FY 2023, India’s technology industry experienced remarkable growth, as evidenced by its record-breaking 15.5% increase, reaching $227 billion in revenue, according to NASSCOM’s India Annual Technology Performance Report.
This growth can be attributed to the successful amalgamation of digitalization and innovation, with platformization and XaaS serving as key drivers in accelerating technology adoption. Moreover, the report highlights the significant contribution of start-ups in scaling up their operations and further propelling industry growth.
Another milestone for the industry was the addition of 445,000 professionals to the workforce, pushing the total direct workforce past the 5 million benchmarks. This achievement is a testament to the industry’s people-first, employee-centric approach, which facilitated a seamless transition to hybrid work models and the expansion of digital capacity-building programs.
India’s position as a global digital talent hub is further underscored by the fact that one in three employees possesses digital skills. This demonstrates the country’s prowess in nurturing a skilled workforce that aligns with the demands of the digital era.
With digital revenue accounting for 30-32% of the nation’s total revenue, India continues to solidify its position as a leader in the global sourcing market, commanding a 59% share. These achievements not only validate India’s new technology value proposition but also highlight the industry’s role in shaping the broader business landscape.
Opportunities:
Emerging technologies such as artificial intelligence and machine learning offer opportunities to enhance credit risk assessments and improve the efficiency and accuracy of financial services.
According to NASSCOM Insights, the COVID-19 crisis has amplified the existing challenges faced by traditional banking business models. Factors such as revenue pressure, low profitability due to low-interest rates and high capital levels, stricter regulations following the previous financial crisis, and increasing competition from shadow banks and new digital entrants have become more pronounced. This will help in more banks focussing on digital growth.
As more consumers and banks shift towards digital platforms, there is a growing demand for innovative and user-friendly software solutions that were previously unavailable. Nucleus Software can capitalize on this trend by providing advanced software platforms that support digital banking and lending services while ensuring the highest levels of security and compliance.
Threats:
While the Fintech industry is poised for growth, it also faces certain threats that need to be addressed. The industry is becoming increasingly crowded, with more competition for customer acquisition in 2023. Traditional banks and financial institutions are also entering the digital space, creating a competitive landscape for Fintech companies. To mitigate this threat, Nucleus Software needs to continue differentiating itself by delivering superior software solutions and maintaining its reputation for excellence and innovation.
Another potential threat is the risk of cybersecurity breaches. With more financial transactions taking place online, Fintech companies need to invest in robust security measures to protect customer data and maintain their trust.
Moreover, the Fintech industry is subject to regulatory scrutiny as it disrupts the traditional financial sector. Navigating complex regulatory frameworks and complying with evolving regulations require ongoing efforts and resources.
Additionally, Fintech companies could face challenges in an economic downturn, as consumers and businesses become more cautious with their spending. This may lead to a decrease in demand for financial services. To mitigate this threat, Nucleus Software should focus on enhancing its product offerings, exploring new markets, and strengthening customer relationships to weather potential economic challenges.
Management:
Managing Director: Vishnu R Dusad
Vishnu R. Dusad is one of the main founders of Nucleus Software Exports Ltd. and has served as a director since the inception of the Company. Dusad completed his Bachelor’s Degree in Technology from the Indian Institute of Technology (IIT), Delhi and has been associated with the development of the software industry in India since 1983 as an entrepreneur. He was appointed Managing Director of the Company in January 1997.
Dusad has enriched Nucleus with his technology background and over three decades of valuable professional experience in the space of Information Technology Solutions for the BFSI sector. His experience encompasses areas of software development, creation of strategic alliances, business development, and strategic planning.
CEO and Executive Director: Parag Bhise
In his most recent role as EVP, Product Engineering, he has been responsible for ensuring the flagship products of Nucleus – FinnOne Neo and FinnAxia – are developed using the latest technologies and techniques.
He has 3 decades of experience in technology. Throughout his career, he has been responsible for a range of areas – including software development, delivery and quality assurance as well as IT infrastructure management and internal systems. As a result, he ensures that their products are high quality, resilient and future-proofed.
He has recently completed MIT’s Professional Certificate in Innovation & Technology, which adds to his Master’s Degree in Computer Applications from BIT Mesra and his MBA from the Management Development Institute – Gurgaon.
Learn more about our services
DISCLAIMER:
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
SEBI Registered Research Analyst - Registration Number: INH300006607
Registration granted by SEBI and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
https://www.intelsense.in