Banks to spend 10% more on IT in 2014, says Gartner

by CXOtoday News Desk    Oct 21, 2013

banks

Increasing competition, customer demands, regulatory changes and network expansion are forcing Indian banks to constantly review and revisit their operating models. The objective is to have a more cost efficient and agile service focused on customer as well as a greater return on investments. According to a recent Gartner report, Indian banks are likely to spend Rs 462 billion on IT products and services in 2014, an increase of nearly 9.8% over 2013 revenue of Rs 421 billion. The research firm predicts that banks will mostly spend in internal IT services, software, data center technologies, devices and telecom services.

The report further highlights that IT services will be the largest segment in overall spending in the banking and securities market at Rs 149 billion next year, due to the continuous focus on the financial services sector by IT services providers, and it forecast to grow at the second-fastest growth rate at 14.5% compared to that of the current year.

Gartner researchers believe that software is expected to be the fastest growing segment, with 15.2 % growth in 2014. In the software segment, ERP, SCM and CRM will exceed the 20 % growth landmark at 21.5 %, while desktop software follows at 19.3 %. Internal services that includes IT personnel is projected to be the third-fastest growing segment at 14.3 % in 2014, largely due to the expansion strategies of banks across the country, especially in rural areas.

Experts also believe banks have always been at the forefront of harnessing newer tech trends and have been the one of the pioneers to venture into the areas of telecommunication, internet and mobility mainly for revenue enhancement with cost efficiencies. As a recent KPMG-CII study points out that the banking industry is keenly exploring the transformation potential of the new generation of technologies available like social media, mobile, analytics and cloud (SMAC).

According to experts, with a greater focus on customer-centricity, banks will continue to invest in SMAC technologies to improve the loyalty of existing customers as well as increase their market share by attracting new customers.