Indian banking and securities companies will spend Rs 47,000 crore on IT products and services in 2014, a 10 per cent rise from Rs 42,600 crore posted in 2013.
This forecast by Gartner includes spending by financial institutions on internal IT (largely personnel), hardware, software, external IT services and telecommunications.
IT services is the largest overall spending category at almost Rs 15,500 crore in 2014 which confirms the strong focus on the banking industry by IT services providers, many of which are leveraging their prominent international exposure within this domestic market.
However, internal services (the expenditure of banks for internal IT staff) is forecast to achieve the highest growth rate amongst the top level IT spending categories – at 17.5 per cent in 2014, the research and analyst firm said in a statement.
“The expansion strategy of banks is entering its peak in India with the release of two new bank licences granted by the Reserve Bank of India to IDFC and Bandhan Financial Services. There are another two dozen financial institutions still waiting for the same grant,” said Vittorio D’Orazio, research director at Gartner.
“The RBI will grant the licence to those banks willing to penetrate rural areas as RBI wishes to increase bank penetration across the country. This opens opportunities for front-office technologies such as branch-related hardware and software, but also for new intangible channels such as mobile and the internet. On the other side, we expect network equipment and storage to grow quite a bit in the data center technology segment while BPO and IT outsourcing will excel across the IT services line,” D’Orazio added.
Core banking systems and other back-office technologies will also be affected by this trend as IT legacies are often unable to properly manage these new channels.