Expenditure on information technology (IT) by banking and security firms in India is expected to reach $8.9 billion in 2017, according to information technology research and advisory firm Gartner. This means an increase of 9.7 percent from 2016, notes Gartner Inc. The forecast includes total enterprise IT spending for internal spending and spending on data centre systems, devices, software, IT services and telecom services.
The findings are a part of its report titled Forecast: Enterprise IT Spending for the Banking and Securities Market, Worldwide, 2014-2020, 4Q16 Update. In the third quarter of 2016 (in October 2016), Gartner had projected that IT spending by banking and securities firms in India will reach $7.8 billion in 2017, an increase of 8.6 percent from 2016.
The increase in projections for 2017, says Moutusi Sau, principal research analyst, Gartner, is because “Banks are increasingly working to enhance their customer facing platforms and investing in payment tools.” She adds, “The banking and securities industry in India saw a sea of change from earlier years in 2016 due to the sudden demonetisation announcement.”
To set things in context, the demonetisation move announced by Prime Minister Narendra Modi on November 8, 2016, led to most banks and ATMs facing a huge shortage of cash, thereby allowing payment wallets like Paytm and Mobikwik a sharp spike in user adoption. Since then, banks have been investing heavily in their digital payments solutions. The government too has been proactive in designing tools to make financial transactions without the involvement of cash. A high-level committee headed by Amitabh Kant, CEO, NITI Aayog, is responsible for identifying digital payment modes. The launch of BHIM (Bharat Interface for Money) app, government-backed mobile wallet, is one of their first steps to digitise everyday cash transactions.
The report also notes that IT services will grow the fastest at 13.8 percent in 2017, as firms in the banking and securities industry invest more in business processes, especially in business process outsourcing. The focus is on outsourcing the activities to achieve operational efficiency and reduce costs in the banking and securities industry in India.
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