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Study: India's FIs to see a bump in IT spending

October 20, 2013

As Indian FIs ramp up efforts to extend the nation's ATM network to reach the rural unbanked, they're also ramping up their IT services — at least in some measure to accommodate network expansion.

Indian banking and securities companies will spend 462 billion rupees ($7.5 billion) on IT products and services in 2014, an increase of nearly 9.8 percent over 2013 revenue of 421 billion rupees ($6.9 billion, according to Gartner Inc.

According to a new study by Gartner, IT services will be the largest segment in overall spending in the banking and securities market at 149 billion ($2.4 billion) rupees in 2014, due to the continuous focus on the financial services sector by IT services providers.

Software is expected to be the fastest growing segment, with 15.2 percent growth in 2014. In the software segment, enterprise resource planning/supply chain management/customer relationship management will exceed the 20 percent growth landmark at 21.5 percent.

"The expansion of the bank's network, and increasing market share focus, remain a top priority for banks in India. In practice, across all emerging markets, banks tend to exploit the front office over the back office in their investments." said Vittorio D'Orazio, research director at Gartner.

"However, this strategy — triggered by their expansion over a large unbanked territory — creates a gap which already starts to attract investments on back-office areas. In particular, we continue to see a number of requests from Indian banks regarding the modernization and legacy replacement of core banking systems, while IT spending for tablets although very tiny, is on pace to grow 351 percent this year and will double in the next two."

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