Indian banking sector to spend 13% more on IT in 2013

Gartner, Inc. estimates spend at US$7.6 billion.

Gartner said Indian banking and securities companies will spend US$7.6 billion on IT products and services in 2013, up 13% over the US$6.7 billion spent in 2012. This forecast includes spending by financial institutions on internal IT (mostly personnel), hardware, software, external IT services and telecommunications.

IT services this year will be the banking sector’s largest overall spending category. This confirms the strong focus on the financial services sector by IT services providers, many of which are leveraging their positions within the domestic market.

Software is expected to achieve the highest growth rate of 18% this year among top level IT spending categories.

Gartner noted that expansion remains a paramount strategy of Indian banks. The Reserve Bank of India is making plans to increase the penetration of banks across the country and is opening up the market to new entrants.

 “In these cases, the front office technologies for the branch will be very attractive. However, to increase their penetration in India, banks will follow the leverage your customer device trend,” said Vittorio D’Orazio, research director at Gartner.

This will evolve the relationship between the bank and its customers over the mobile channel without remarkably increasing IT costs. Gartner sees penetration rates of smart phone devices in the triple digit range which is by far greater than any branch expansion rate.