Gartner predicts the Indian banking sector will increase IT spending next year by almost 10%, as the Indian government awards more banking licenses to make financial services available to more people.
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Since technology is a great way to break barriers and reach out to a far-flung population, focus on IT spending has been at the forefront of Indian banks’ strategies.
Gartner predicts that IT spending for Indian banking and securities firms will increase 9.8% in 2014 as banks expand. The analyst company said 462bn INR will be spent on IT products and services next year, compared to 417bn INR in 2013 and 369bn INR in 2012. The areas of spending will include IT services, IT personnel, datacentre technologies, telecom services and devices, said Gartner.
But how are Indian banks investing in IT?
Vittorio D’Orazio, research director at Gartner, said new entrants to the Indian banking sector would need to do things smartly through better operations. “They would also need to have products and offerings which would attract customers” said D'Orazio.
India Post will assist the government’s aim of taking banking to the rural population. Some 40% of the Indian population has no bank account, so India Post – with its 155,000 branches – is the ideal organisation to get rural people into the banking system. India Post has one branch per 8,000 people and 21km2.
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The organisation is rolling out Infosys’ Finacle banking system at the 155,000 post offices in India. Infosys is rolling out 10,000 tablet devices to India Post staff . The devices will integrate Finacle and help India Post staff to provide mobile banking services to rural people.
Tailoring services with analytics
Meanwhile, the established private bank, Indusind Bank, will increase spending on mobility-related applications, customer analytics and campaign management.
“This would be in addition to the major refresh programs currently going on,” said Paul Abraham, chief operating officer at Indusind Bank.
Client data will be collected through mobile applications, analyzed through analytics software and used to tailor customer services.
"Banks will increasingly use customer relationship management software to manage client information, target sales at individual customers – rather than adopt a one-size-fits-all approach – handle complaints and support customer wallet management,” said Abraham.
Developing finance IT skills
The IT workforce at banks will change to meet the needs of expanding banks. Abraham feels that social media, mobility and analytics expertise will be in demand when it comes to manpower.
This search for new skills at banks will increase spending on people, according to Gartner. Internal services, including hiring, will be the third-fastest growing segment at 14.3% in 2014. D’Orazio at Gartner said the need for critical roles such as CIO’s, chief digital marketing, IT enterprise architects would be on top of hiring list for IT related roles for firms.
He said that, for existing banks, IT employees must work in close collaboration with businesses.
Gartner has estimated software to be the fastest growing segment, with 15.2% growth in 2014. Spending on ERP/supply chain management/CRM is likely to surpass the 20% growth.