Indian banks, securities firms to spend Rs 47000 cr on IT

New Delhi: Domestic banks and securities companies will spend Rs 47,000 crore on IT products and services in 2014, 10 percent more than a year ago, research firm Gartner on Wednesday said.

The predicted expenditure includes spend on internal IT (largely personnel), hardware, software, external IT services and telecommunications, it said in a statement.

IT services forms the largest overall spending category in 2014 at almost Rs 15,500 crore, confirming strong focus on the banking industry by IT services providers, many of which are leveraging their prominent international exposure within the domestic market, it added.

However, internal services (the expenditure of banks for internal IT staff) is forecast to achieve the highest growth rate amongst the top level IT spending categories at 17.5 percent this year.

Commenting on the trends, Gartner Research Director Vittorio D'Orazio said: "The expansion strategy of banks is entering its peak in India with the release of two new bank licenses granted by the RBI (Reserve Bank of India) to IDFC and Bandhan Financial Services. There are another two dozen financial institutions still waiting for the same grant."

Given its wish to increase the bank penetration across the country, the RBI will grant the license to those banks willing to penetrate the rural territory, he added.

He further said it has opened opportunities not only for front-office technologies, such as branch-related hardware and software, but also for new intangible channels such as mobile and the Internet.

The research firm has also said core banking systems and other back-office technologies will also be affected by this trend as "IT legacies" are often unable to properly manage these new channels, hence explaining the estimated growth of 23 percent for the vertical specific software in 2014.