June 19, 2015
| Financial Chronicle
Nucleus to focus on software products alone
BSE-listed banking technology provider Nucleus Software is shifting its strategy to focus mainly on products. In a reversal of the general market trend, the company is reducing its services business to focus on core products.
Nucleus offers lending and transaction banking products for the financial services industry and has over 150 companies as its customers. Its flagship products areFinnOne and FinnAxia. “Over the last two years we have gently moved from services-led play to pure product business. Earlier we would do customisations for individual customers and hence the implementation cycles were long. We ended up developing multiple versions of the same product for individual customers and it was hampering our growth,” said Avnish Datt, global head — strategy of Nucleus Software.“We are gradually reducing our services business. While sales cycles are getting longer, they are also becoming mature. We now have an on-going product development programme and six-monthly product release cycle.”For 2014-15, Nucleus reported consolidated revenue of Rs 353.1 crore against Rs 346.2 crore in the previous year. Product business revenue for the year stood at Rs 255.6 crore in comparison to Rs 238 crore. Net profit stood at Rs 64.7 crore against Rs 64.3 crore in the previous year.The services’ business now contributes about 28 per cent of the company’s revenue against over 32 per cent the previous year. “We are also venturing into newer geographies including the United States, Australia and Europe. While India, Asia and the middleeast have been our strongest markets, we are venturing into the other geographies to improve our margins,” he added.The company is investing in sales and marketing and also research and development, he said but refused to divulge investment numbers. By focusing purely on products, it is able to improve efficiencies in product development, he added.“Apart from entering newer geographies, we are also enriching our analytics product, which will add better value to customers when used along with our lending product.For example, customers who use our loan management product will get greater insights from our analytics product about the nature of their customers, patterns in repayment, demographics, etc. Moreover, we are also exploring other delivery channels including mobile apart from enhancing our sales leadership,” Datt said.