APAC banks to drive IT investment
Banking is perhaps the most dynamic industry when it comes to IT adoption and investment. Analysts believe that technology investment in the banking sector will continue to be higher in the coming years, especially in the Asia Pacific region. According to Global financial services consultancy firm Celent, the sum of bank IT spending across North America, Europe and Asia Pacific will grow to $179.2 billion in 2013, which is approximately 3.4 per cent higher than the spending in 2012. The Celent report further predicted that the IT spending is expected to grow by 3.6 per cent in 2014 and 3.4 per cent in 2015.
The study points out that the majority of growth is coming from the APAC region where spending will grow by 5.9 per cent in 2013 to $62.3 billion. The growth will continue in 2014. IT spending will grow by 5.8 per cent in 2014 to touch $66.5 billion. According to Celent analysts, North American banks are also showing a positive outlook where IT spending will grow by 4 per cent in 2013 to $56.9 billion. However, in Europe, IT investment in the banking sector will be dismal as the region is expected to witness a 0.4 per cent growth in 2013 to $59.5 billion. The spending will remain flat over the next 2-3 years, said Celent.
The Indian scenario
So the report clearly states that APAC banks are driving the IT investment in the next few years. The study says that banks in APAC are facing several pressures such as BASEL III norms, stock market volatility and local currency inflation. Analysts are banking on India where technology spending in banks reached $7.5 billion in 2012, growing at 17.2 per cent over 2011. The report said that IT investment in Indian banks is an example of a late blooming phenomenon when compared to its Chinese and Japanese counterparts, but it is gaining traction over the past five years.
As Shrawan Kumar, General Manager – IT, Allahabad Bank pointed out that the banking industry is currently going through an exciting phase where technology is acting as a constant enabler and change driver. He too believes that technology adoption in banks started nearly a decade ago, but in the last five years, there have been massive transformation.
In Indian almost all PSBs and private sector banks have Core Banking System (CBS) in place. Currently, they are leveraging IT to for offering alternate channels such as smart cards, ATMs, internet, social and mobile banking. Banks have taken considerable measures to improve internal efficiencies in order to enrich the overall customer experience.
The report revealed that in the APAC, banks will invest in areas such as CRM, customer-centric CBS, electronic channels such as mobile banking, internet banking, BI and analytics, disaster recovery and risk management in the next 2-3 years.
“Mobile banking is a space to watch out for in the coming months. The feasibility of the mobile banking channel continues to grow in line with smartphone and tablet adoption and the proliferation of mobile banking apps. Banks will also continue to innovate around mobile banking technologies to bring the best services to customers,” says Rathin De, GM – IT, ADC and CMS at United bank of India.
Wealth management is another area of investment for banks in India and China. Private banks have already invested significantly in this area. Kumar believes that as customers are looking for diverse of investment options, beyond time deposits or savings, banks will continue their spends in these areas to remain competitive.
The Celent report also highlighted that with high technology demands, banking service providers will bring in newer and more sophisticated technologies to this sector. Banks will increasingly outsource some of their activities to external providers. Moreover unlike in the past, banks will not see IT as merely a support system, said the report highlighting that the banking sector in APAC will start to focus on innovating with IT so as to make a difference in the way they cater to their customers and create a competitive edge.
- Is Smart UI the Next Big Thing for Personalized Banking?
- India's Telecom Growth To Be Muted In 2019-20: Ind-Ra
- 12 Trends Reshaping Banking in 2019
- Digital Transformation In Financial Sector To Get Bigger
- Indian Businesses In An AI Adoption Spree, Says Gartner
- Unistal Brings Security Solutions For Oil & Gas Enterprises
- Microsoft's M12 Announces Its First India Investment
- Infor Invests USD 1.5 Bn Ahead of Potential IPO
- Smart Speaker Usage Booming in India, Says Study
- Shocking Gender Gap Exists In AI sector, Shows WEF Report