MUMBAI, INDIA: The economic downturn, which broke the back of majority of US-based financial institutions, has caused a worry among Indian IT companies. Technology investments by these institutions are expected to be minimal or in some case totally shelved, thereby forcing IT vendors to look for other pastures or shut down shops for good.

However, speakers at NILF 2009 argue on the contrary. They firmly believe that for Banking and Financial Institutions to survive the present downturn, investment in technology is the best bet for them to come out of times unscathed.

The session, 'Will BFSI continue to bank on IT', as expected, started on a gloomy note for Indian IT industry, but gained momentum and optimism in favor of BFSI looking at IT to bail it out of recession.

Kicking off the session, Rodney Nelsestuen, research director, research firm, Tower group, said the next financial year will, as expected, see a dip in IT investments coming from BFSI segment, which will continue to witness similar trend till 2012. After that, Rodney forcast the investments to look up.

“Because of industry going through tough times, we will see revenues by Indian IT companies to take a hit for an initial period. This situation has been aggravated by the protectionary voices, recent terror attacks in Mumbai, which because of recency affect is on minds of many US-based financial institutions,” added Rodney.

However, Rodney says because of compliance and regulatory framework, BFSI has to turn to IT and this will see investments coming in near future.

David Awcock, CTO, Standard Chartered Bank, however, said for the time, meltdown lasts, CIOs will look at sweating out investment in existing technologies rather than making new investments.

“I will not see any new investment coming soon, but I foresee BFSI sectors going for server consolidation, storage acceleration and network rationalization. Too much time is spent in fighting technology rather than leveraging benefits of technology and I see this as consolidatory period to streamline processes and realign technology with business processes,” added Awcock.

Awcock added that BFSI companies going forward will also put more emphasis on open source and renegotiating existing contracts and investment in new technologies like virtualisation will take a back seat.

Jonathan Teplitz, MD, JP Morgan, put spark in the discussion and cheer to the faces of the IT vendors present, by arguing the case for the IT as a great bet for BFSI to chart out new growth areas.

“In these times, we need technologies which can manage capacity, turn on and turn off processes as and when we need. Technology being an enabler would allow us to add new customers, new processes as well as weed out ones that are not needed.”

He said IT will help banks to reach out to customers in new geographies in much cost-effective manner.

“Recession in the US and Europe means that we have to look for new geographies and we can target middle market in Asia or Africa by leveraging wireless technologies,” added Teplitz.

Talking about JP Morgan, Teplitz said the firm was digitizing all its branches and the process has helped them to save 700,000 hours of manual work.

“Today our customer can drop in a cheque and it gets automatically added to his account. Imagine the costs we would have incurred by manually sending these cheques to all our branches. Technology is helping us to automate people and processes which helps us to understand buying patterns and make wise decisions,” he added.

Again when it comes to disaster recovery, Teplitz added that the companies is leveraging on the investments already made. “Our services ran unhindered in spite of our US centre getting hit by Katrina hurricane Bangalore did the job seamlessly.”

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