According to IT analyst firm Springboard Research's latest report, the banking, financial services and insurance (BFSI) IT services market in India is expected to boost its IT spending from US$1.6 billion in 2009 to US$2.7 billion in 2013, growing at a compound annual growth rate (CAGR) of 14.2%. Cutting edge competition and business expansion has been key enablers for technology adoption in this sector. "Although the Indian banking industry has not been severely affected due to the economic turmoil, it made them change their go-to-market strategy. The industry is going through a transformation and is becoming lot more market driven," says Sanchit Vir Gogia, the senior research analyst of Springboard research.
Gogia observes some of the key IT spending trends in the Indian BFSI sector during 2010.
• There is a great rush to step up customer service levels and companies in the Indian BFSI space. The move to rev up IT spending on CRM solutions and customer focused technology is driven by the increasing need to maintain and enhance customer relationships.
• Business Intelligence (BI) is yet another key IT spending priority for BFSI enterprises. BI helps BFSI organizations to identify and capture potential customers. Organizations in India are also using high-end analytics to identify fraud and money laundering. Springboard feels that BI and anti-money Laundering (AML) solutions will be significant IT spending drivers in the Indian BFSI marketplace over the next three years.
• Many Indian banks have already purchased AML solutions, and others now plan focus their IT spending plans on such tools during 2010. A key challenge for these banks will be the successful integration of these solutions with existing databases. Private banks are the leaders in adoption of AML solutions; however, it's the foreign banks that lead the adoption curve in India – they already have an AML solution from their global headquarters.
• Insurance firms are also focusing their IT spending agendas on BI and CRM tools. These tools help insurance firms to check customer behavior, investment and spending patterns. A lot of IT spending is already being witnessed in India on this front.
• Green IT is one of the topmost IT spending priorities for CIOs in banking and finance. Indian BFSI enterprises now benefit from the green consolidation of storage, server, and data center-based applications. However, the primary reason of adoption continues to be cost benefits -- not the social cause attached to it.
• Banking is definitely going rural. After taking over the metro markets, the private banks are now moving to Tier I and Tier II cities. Core banking solutions (CBS) still remain the top IT spending priority on this front. More investments are now being seen on CBS and automation of various processes within the bank.
• Business continuity is one of the key concerns for most banking players in India. Due to this, companies are now utilizing their IT spending for disaster recovery and business continuity solutions.
• Collaboration tools are largely getting adopted within the Indian BFSI industry. Unified communications will be an emerging technology within this sector that would help in communication – national as well as international.
• Managed services are becoming popular within co-operative banks. These services include banks outsourcing their servers, networks, and security management services. It will gain momentum in tier I and II cities.
• Mobile banking is attracting a lot of traction in India. This is where IT spending will happen, especially in the information security space. As far as information security is concerned, data loss prevention is an important part of the security landscape, since it provides end to end prevention. A large number of banks will look at adopting this technology.