India is cementing its place as an emerging IT market, specifically in the BFSI sector. In fact, the BFSI IT Market in India is forecast to grow at a CAGR of 14.15 percent from 2014-2019.
New Regulatory Frameworks Will be Key for Market Growth
Over the past few years, the financial sector in India has seen the introduction of a number of new regulatory frameworks, which have increased the need for enhanced compliance functions among organizations in the BFSI sector.
Regulatory authorities in India such as RBI, SEBI and IRDA have regular obligations related to IT adoption to ensure better service and security. In April 2011, RBI released a guiding principle on information security, electronic banking, technology risk management and cyber frauds. It issued detailed guidelines to its affiliates under nine subject areas including IT governance, cyber frauds, IT operations, IT services outsourcing, information security, IS audit, business continuity planning, and legal issues.
Because of guidelines like the ones imposed by RBI, it is expected that the style of bank operations in India will see a shift towards more advanced technology over the projected period.
Increased Use of Mobile Banking
A huge and growing number of smartphone users in India has precipitated increased investment in mobile applications like mobile banking.
Increased wealth, demand for better personal banking, and high cellphone penetration in the country are creating the perfect conditions for an influx of mobile banking services, and many banks are stepping up to fill the void.
Some examples are:
- Union Bank of India and SBI have introduced mobile payment services in partnership with players such as Nokia and Reliance Communication in India
- HDFC Bank partnered with Vodafone to get access to its select retailers, which would act as HDFC’s sub-agents, enabling customers to deposit and withdraw cash through their mobile phones
- Reliance General Insurance partnered with GoDB Tech and adopted a mobile insurance POS platform through which it equips its affiliated insurance agents to sell policies directly on the customer’s doorstep
Lack of Awareness of Advanced Technologies and Rising Security Issues
Despite the overall strong market growth in the industry, there are still some serious concerns that are standing in the way of more aggressive market growth.
Cyber security does seem to be the buzz word of the hour, but it is a big concern for any organization looking for adopt new technology. While banks in India are clamoring to streamline their business, lack of awareness of advanced technologies coupled with security concerns is deterring some end-users from fully buying into new baking IT.
However, the benefits of updated IT seem to be outweighing the concerns for a lot of end-users in the BFSI IT sector in India.
Recently, many companies in the BFSI sector in India have started to adopt geographic information systems (GIS) applications in their daily operations. These systems are used to make decisions relating to the location of a new branch or ATM, understand loan-lending landscapes based on customer presence, and identify underserved geographies.
GIS provides users with geographical data including correlation between per capita income of individuals in a specific geography and use of bank branches in surrounding locations, which basically lets banks make optimal use of their resources and carry out well-informed business decisions.
