The research includes spending by financial institutions on internal IT (largely personnel), hardware, software, external IT services and telecommunications.
“Established firms in the industry are investing to strengthen their operational infrastructure to support regulatory needs, as well as sustain increasing demands from the digital channels. Moreover, the Reserve Bank of India has issued licenses for 11 payment banks and another 10 small finance banks,” said Rajesh Kandaswamy, research director at Gartner.
These new entrants will grow the Indian IT market by their own technology investments, and also by stimulating the incumbents to invest in modern technology. India has also been upgrading, and increasing, the technology infrastructure that facilitates payments. Banks will take advantage of these by building technology-enabled services on top.
The market research firm also said technology will play a more pervasive role in banking and securities, and in all aspects of the business.
Indian banks will increase investments in digital solutions, modernise back-end systems and increase their reliability and speed.
IT spending by insurance firms
Indian insurance companies are expected to increase their IT spending by 9.6 percent in 2016 to INR 140.8 billion.
Indian insurers are prioritizing their technology investments for 2016 into digitalization, and particularly analytics capabilities.
Derry Finkeldey, research director at Gartner, said: “They are primarily looking to digital to grow their businesses in the domestic market.”
Spending on IT services will reach INR 45.2 billion, which is 32 percent of insurance IT spending. Enterprise software spending, which includes enterprise resource planning (ERP), supply chain management (SCM), and customer relationship management (CRM), will grow 22 percent in 2016 to INR 948 million.