Indian Economy News

Indian banking and securities firms to spend Rs 47,000 crore on IT this year: Gartner

Bengaluru: Indian banking and securities companies will spend Rs 47,000 crore on IT products and services in 2014, an increase of more than 10% over 2013, said IT advisory firm Gartner.

This forecast 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% in 2014.

"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," said Vittorio D'Orazio, research director at Gartner. "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 (BPO) and IT outsourcing (ITO) 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 for the vertical specific software in 2014.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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