Banks and financial institutions in India are expected to invest more than $2 billion (Rs 8,200 crore) by December end to upgrade their information technology (IT) infrastructure -- an 18% increase over last year's spend of $1.7 billion.By 2010, this figure is expected to touch around $3.5 billion, according to a just-released Skoch Consultancy report.The areas include customer relationship management (CRM), human resources management (HRM), business intelligence (BI) and data mining kind of applications and services, states the report. The spend on core banking software packages, on the other hand, registered a slower growth last financial year. It grew lower than 10 per cent while still accounting for more than 50 per cent of packaged software spending of $263 million (around Rs 1,080 crore) in 2006-07.The seriousness that banks have shown in enhancing the IT infrastructure can be seen from the fact that, while they spend about $1,764 million (around Rs 7,230 crore) in 2006, an estimated $2,078 million (Rs 8,600 crore) is expected to be spent by December 2007 - a growth of 18 per cent. Out of the $ 1.7 billion (Rs 6,970 crore), about $863 million was spent on hardware, $263 million on packaged software and $820 million in services.According to Sameer Kochhar, CEO of Skoch consultancy: "With enhanced mergers and acquisitions activity, middleware that is crucial to make heterogeneous systems in the banks to work together will become a growth driver in addition to security, mobility and non-core banking applications like CRM. We expect that by 2010 the investments in the areas of IT, IT applications and services could be crossing $3.5 billion market size."Further, as the banks and financial institutions try to reach the rural areas, they will have to depend heavily on partners as correspondents or facilitators, states the report. Micro-credit institutions and non banking financial companies (NBFC) are expected to see a high degree of IT spending not just for automation but also cut down transaction costs for reaching financial services to the hinterland.
