Becoming figure conscious

The Indian economy, buoyed by the growth in GDP exceeding 8% y-o-y since FY
'04, has entered a new phase termed as “India 8.0”. The country has emerged as
the second fastest growing economy by growing at a rate of 9% in FY '08. This
was largely fueled by the services sector, with major contributions from the
BFSI (banking, financial services and insurance) sector. The sector with its
blazing success is not only spreading its wings in the global arena but is also
creating a niche for itself on account of credible and reliable services.

The sector's continuous thrust on IT has also helped it expand its customer
reach, enhance efficiency, and improve overall performance. The ultimate
objective of the sector to deliver anytime, anywhere services to customers is
now being realized through the use of ICT. From traditional software and
connectivity solutions to a new set of service delivery technologies such as
ATMs, mobile, and Internet banking, the Indian BFSI sector is undergoing a
transition toward a better and healthier financial services environment for its
clients on the domestic, as well as global front. Thus, the total IT market in
the BFSI sector is expected to grow from Rs 15,064 crore in FY '07 to Rs 29,009
crore by FY '12, registering a CAGR of 14% (source: India Overall Trends in IT
Spending by Industry Verticals, 2008-2012).

Encompassing the overall IT adoption by the BFSI sector, the individual
sub-segments have their own business imperatives and IT adoption dynamics, key
for a marketer eyeing the BFSI sector. A study by IDC India titled “Future of IT
in Indian BFSI Sector” states, “The BFSI sector, one of the largest spenders on
IT, has ambitious plans for technology deployments in the next 4-5 years. With
anti-money laundering, Basel II, and financial inclusion being the focus of
banks, the insurance industry is eagerly looking at solutions like customer
relationship management and business intelligence. The mutual funds and the
stock exchanges on the other hand, being the early adopters of IT in India, have
also embarked on advanced applications for uptime maintenance, regulatory
compliance, and data security.”

Key Focus Areas

From a banking industry perspective, regulatory compliance and risk
management are the major areas of focus for banks worldwide, with the Indian
banking industry being no exception. Compliance to Basel II and data security
norms have been the prime drivers of IT spending by the banking fraternity.
Moving ahead, they are also looking at content management and intelligent
interaction management. “Knowing customers well, effectively using analytics and
following through with quality service delivery are the key objectives for which
the Indian banks are increasingly deploying more and more IT resources and
applications”.

The insurance industry in India is forecasted to witness sweet IT spending
spots in the years ahead. While the focus lies on the upgradation of IT
solutions and deployment of advance level applications, solutions like customer
relationship management are going to drive the industry's IT spending in next
2-3 years. The companies are looking forward to explore the latent needs of
customers to further add to their bundled package of products. Also, to increase
their presence in rural and semi-urban areas, the insurers in India are working
extensively on e-enabling their agents.

Financial services firms, long known for their aggressive spending on
technology and process redesign have been constantly focusing on a long-term
vision to sustain growth and remain competitive. As a result, their spending
tends to focus on solutions that increase revenue rather then decreased costs.
In the midst of integration and networking tools, the FS companies are
increasingly looking toward Web services and regulatory compliance for
propelling their spending on project-based services. Institutions completing
their planning and design phase for Basel II compliance are looking closely at
the guidelines for benchmarking purposes.

The Indian BFSI sector is transforming its IT management and IT
infrastructure to support its business processes more efficiently and
effectively. Today, customer experience in the Indian BFSI scenario is an
electronic experience. Consequently, IT is not only important to the business,
increasingly it has become the business. Ensuring that IT supports the delivery
of a superior customer experience is the responsibility of the CIO. Today's CIOs
have moved from being cost-center heads to become navigators and translators of
critical business enabling technologies and true strategic advisors. The top
priority for a BFSI sector CIO today is delivery of a superior customer
experience across all services, with IT as his key tool and main resource.

Praveen Sengar and Arpan Gupta

(The authors are analysts, Industry Verticals Research Practice, IDC India)