Indian banking and securities firms will be spending about INR 470bn on IT products and services in 2014, with technology to provide real-time data at the top of shopping lists.
In the first quarter of 2014, the Reserve Bank of India (RBI) fined 22 banks for flouting know-your-customer (KYC) mandates, anti-money laundering norms and various other rules. Owing to the increasing number of scandals, the Indian finance sector is looking to upgrade its technology systems.
Banking institutions are investing in modern IT tools that will present them with real-time data and control operations better. The RBI has also planned on implementing a Giro-based Indian bill-payment system, where every citizen will be able to pay their utility bills, school fees, medical bills and more electronically.
Driven by increasing avenues for growth, several banks are looking to increase their operations.
According to Gartner, Indian finance firms will spend 10% more this in 2014 than in 2013, when INR 426bn was spent. The investment would be largely confined to internal IT (personnel), software, hardware and external telecommunications and IT services.
The expansion strategy of banks is entering its peak in India with the release of two bank licenses granted by the RBI to IDFC and Bandhan Financial Services, according to Gartner research director Vittorio D’Orazio.
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“There are another two dozen financial institutions still waiting for the same grant. Legacy systems will be unable to manage the emerging channels and, as such, we expect a 23% growth in vertical-specific software systems in 2014,” he said.
UCO Bank assistant manager Naveen Kumar said banking services are at the core of every economy.
"From individual saving accounts to huge governmental transactions, everything is better handled with the use of IT," he said. "Increasing demands have certainly led to emerging IT channels and platforms.”
Gartner also recently released research which showed the Indian insurance market is forecast to be the third-fastest growth market for ICT in 2015, after retail and banking. Insurance companies are expected to increase spending on IT products to INR 130bn, while they will also spend INR 4.2bn on mobile devices.
Gartner research director Derry Finkeldey said insurers in India are looking at how they can extend access to corporate applications via mobile devices.
“This not only leads to spending on the devices, but also on mobile-data management (MDM) platforms and other application development,” he said.