Indian banking and securities companies will spend Rs 41,600 crore on IT products and services in 2013, up 12 per cent from Rs 37,000 crore spent in 2012.
This forecast includes spending by financial institutions on internal IT (including personnel), hardware, software, external IT services and telecommunications, according to a study by research and advisory firm Gartner.
Telecommunications remains the largest overall spending category at Rs 12,200 crore in 2013.
However, due to a strong focus on the financial services sector by IT services providers, it is growing strongly and is forecast to overtake telecommunications in total size in 2014.
“Most banks see expansion and increasing market share as their main priority. As in other emerging markets, the front-office gets preference over the back-office in major investments,” said Vittorio D’Orazio, research director at Gartner.
Software
Software is forecast to achieve the highest growth rate among the top-level IT spending categories, exceeding 18 per cent in 2013.
A growth of 23.6 per cent is predicted for desktop software and 22.6 per cent for enterprise resource planning, supply chain management and customer relationship management (CRM), with CRM and other front-office applications high on the agenda, it said.
Modernisation, legacy replacement
“Modernisation and legacy replacement remain major issues for many banks as the gap widens between front-office and back-office services. We see increasing adoption of packages, especially for 'lite' core banking systems to address modernisation and replacement,” said D’Orazio.