Indian banking firms to spend Rs47,000 crore on IT In 2014

Indian banking and securities companies are projected to spend Rs47,000 crore on IT products and services in 2014, a 10-per cent increase from Rs42,600 crore estimated to have been spent in 2013, forecasts technology research firm Gartner in a new study.

This forecast includes spending by financial institutions on internal IT (largely personnel), hardware, software, external IT services and telecommunications, the study showed.

IT services are the largest overall spending category with almost Rs15,500 crore in 2014.

However, internal services (banks' expenditure for internal IT staff) is forecast to achieve the highest growth rate of 17.5 per cent in 2014 amongst the top level IT spending categories.

According to Vittorio D'Orazio, research director at Gartner, ''The expansion strategy of banks is entering its peak in India with the release of two new bank licenses granted by the Reserve Bank of India (RBI) to IDFC and Bandhan Financial Services. There are another two dozen financial institutions still waiting for the same grant.''

Orazio explained, ''The RBI will grant the license to those banks willing to penetrate the rural territory as RBI wishes to increase the 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 business process outsourcing and IT outsourcing will excel across the IT services line.''

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. This explains the estimated growth of 23 per cent for the vertical specific software in 2014.