India's Polaris, local banks to set up financial tech firm

Three local banks have tied up with a global financial technology firm -- Polaris Software with its headquarters in India -- to set up a joint venture IT company in Bangladesh.
The Tk 7 crore company would initially provide software solutions to these three banks before selling customised services to other banks, non-bank financial institutions and insurance companies.
The Chennai-based IT firm will hold a 51 percent stake in the proposed company. Three Bangladeshi banks -- Sonali Bank, Bangladesh Commerce Bank and Rajshahi Krishi Unnayan Bank (RAKUB) -- will own the rest 49 percent shares in the company.
These banks and Polaris Software have announced the move with signing a memorandum of understanding on Saturday in Dhaka. The name of the new company would be Sonali Polaris FT Ltd.
None of the parties has yet disclosed formally the financial involvement required to form the firm.
“It (investment) would be quite large,” AQ Siddique, chairman of Bangladesh Commerce Bank, told The Daily Star yesterday. “Investments will depend on the size of operations,” he added.
Officials of the local banks, however, said the total investment would be Tk 7 crore (around $1 million).
Of the 49 percent local stakes, Sonali Bank will hold 34 percent, Bangladesh Commerce Bank 10 percent and RAKUB 5 percent.
The joint venture company will provide end-to-end core banking solutions that would allow the banks to run a single application for its different functions, thereby facilitating easy operations to its customers.
“This is a great initiative as it will create employment, ensure transfer of technology and save much-needed foreign currency spent for imports of software,” said SM Jahangir Akhter, executive vice president and head of IT of Bangladesh Commerce Bank.
Akhter hopes the joint venture company will start operation in three months.
He said, this would be the local banks' second instance of joint venture IT firm after Bank Asia to provide software solutions.
Sonali Bank is the largest state-owned commercial bank in Bangladesh with nearly 1,200 branches including operations in the UK, the US, Middle East and India. RAKUB is also a fully state-owned specialised bank, while Bangladesh Commerce Bank is a commercial bank with public-private partnership.
Founded in 1993, Polaris Software is a leading financial technology company. Polaris offers state-of-the-art solutions for core banking, corporate banking, wealth and asset management and insurance. The company is the outsourcing partner for nine of the top 10 global banks and seven of the 10 top global insurance companies, according to the company's website.
Total income of Polaris grew by 26 percent to $354 million from $280 million in fiscal 2010-11 ended on March 31.