Indian banking and securities companies will spend ₹47,700 crore on IT products and services in 2014, an increase of 12.7 per cent over 2013 revenue of ₹423 billion, according to a study by Gartner.

This forecast includes spending by financial institutions on internal IT services (including personnel), IT services, software, data centre technologies, devices and telecom services.

“Banks will continue to focus on expanding their branch network. There will be about 2,000 new branches in India by the end of this year,” said Vittorio D’Orazio, research director at Gartner.

“This strategy – triggered by the need for expansion and for getting market share – is also underpinned by the new bank licences released by the RBI. The modernisation of the back-office, as well as the need to be compliant with international regulations, and increased challenges from new more demanding customers are other trends we see in these markets,” he added.

IT services will be the largest segment in overall spending in the banking and securities market at ₹14,900 crore in 2014, due to the continuous focus on the financial services sector by IT services providers. The IT services segment is forecast to increase at the third-fastest growth rate of 15.3 per cent compared to 2013.

Internal services (that includes IT personnel) is projected to be the fastest growing segment at 21.6 per cent in 2014, largely due to the expansion strategies of banks across the country, especially in rural areas, which require more personnel on the field.

Software is expected to be the second-fastest growing segment, with 19.2 per cent growth in 2014. In the software segment, vertical specific software is the fastest sub-segment due to core banking system replacements and other back-office consolidation which will steer banks from internally developed software to external packages.

>rajesh.kurup@thehindu.co.in

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