Indian banks IT spending to grow 12.7% in 2014
26 February 2014
Indian banking and securities companies will spend Rs 47,700 crore ($477 billion) on IT products and services in 2014, a 12.7-per cent rise over 2013 revenue of Rs42,300 crore.
This forecast by research and analyst firm Gartner includes spending by financial institutions on internal IT services (including personnel), IT services, software, data centre technologies, devices and telecom services.
IT services will be the largest segment in overall spending in the banking and securities market at Rs14,900 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 at 15.3 per cent compared to 2013.
''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 licenses released by the RBI. The modernization 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," added D'Orazio.
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.