Differentiation: The Biggest Area for IT Investment in BFSI Sector
The Banking, Financial Services and Insurance (BFSI) sector is considered to be the 2nd largest consumer of technology in the world; the first being the Telecom sector. As a consequence, the entire sector, both globally and in India, is expected to witness an increased momentum for different kinds of cloud based solutions. In fact, this highly-regulated sector in the country of India is believed to bring in a lot of growth opportunities.
Which is the best IT investment area in the BFSI sector of India?
One of the prime areas, as Oracle, the computer technology giant, thinks it to be is “differentiation”, when it comes to IT investment in the BFSI sector. It is more relevant for the Indian BFSI sector for the following reasons:
- The big players would be concentrating more on digitalization of their products or services. They are more likely to adopt digital distribution of products and services than opening up new branches on different locations.
- Termed as “the retirement decade”, this decade is being anticipated to come up with about 3 lakhs vacancies in different banks of the public sector, which in turn would pave the way for a major IT spend towards capital and talent management.
- Finance and integrated risk is another big area for IT investment. Though, initially, it has never been an investment-worthy area, however, the introduction of IFRS, Basel III regulation and a number of other regulatory prescriptions by RBI (Reserve Bank of India) and BIS (Bank of International Settlements) has led to an increased IT investment in this arena.
Does cloud feature in the portrayed IT investment trends?
Research says that the conventional technologies are still attracting about 70% of the entire IT investment. However, big players like Oracle strongly believes that it’s not far when the IT investment trend would shift from the traditional back office data management to technologies related to customer interaction, mobility, on the fly analytics management etc. Even different studies by some of the famous research firms speak in favour of this. Let’s see how:
A recent study by McKinsey shows that the total number of customers opting digital banking is more likely to rise remarkably on a global level. In Asia, the number is expected to reach about 1.7 billion by the year 2020, out of which the country of India alone has been portrayed to have 450 million digital banking customers by the end of that year. Now, in such a scenario, banks looking forward towards acquiring new digital-minded customers need to explore cloud based technologies. In a nutshell, it is better for banks to deploy technologies that can help them glide into the digital banking era.
According to this reputed IT research and advisory firm of America, more than 60% of the global banks would resort to the cloud based transaction processing. In fact, this is what is making the IT departments of those banks become increasingly bimodal. Coined by this IT research firm, the concept “Bimodal IT” refers to the IT departments of banks having the following two operational modes:
- Lights on mode
- Innovation mode
However, in order to catch up with the continued changes in customer behaviours, banks based in different parts of the world would need to continue investing in the traditional technologies and simultaneously adopting cloud technologies.
Now, this adoption of cloud technologies would not just be completely cost-driven and triggered by improvements in the efficiency level but would primarily be an effect of the major shift in banking behaviours of modern customers; and banks, which plan to stay ahead need to surely opt the emerging cloud technologies. After all, unless a bank cannot be differentiated from others in the positive sense, it can never stay ahead of its competitors. This is what would call for more IT investment in the BFSI sector.
In fact, the sector has already started witnessing the growing IT investment opportunity for “differentiation”. The big technology players in the world like Oracle are thinking of introducing “Data-as-a-Service” in place of the traditional Platform-as-a-Service and Software-as-a-Service. This newly introduced notion would enable banks to build digital profiles for customers, based on customers’ daily banking behaviours and drive their revenue accordingly; and all of these just points to the increasing IT investment for differentiation in the BFSI sector.
- AI & MI
- Big Data
- Buy Hours
- Data Analytics
- Data Security
- Dedicated Hiring
- Digital Buzz
- Digital Payment
- Enterprise Mobility
- Flexi Hiring Solutions
- Flexible Operation
- Hire Experts
- Home Automation
- Industry News
- Inside Indus Net
- Marketing Automation
- Mobile App
- Mobile Game
- Modern Lifestyle
- News @ Indus Net
- Social Media
- Time Management