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 sectors 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 industrys 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. Todays 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
maildqindia@cybermedia.co.in