NEW DELHI: Private banks are seeing a significant boost in information technology spending as most transactions are now done digitally. Unlike the one-time capital expenditure incurred in migrating to core banking, IT is now becoming a recurring cost, accounting for up to 10% of operational costs.
Bankers responded to queries on the level of their IT capabilities in view of the RBI’s action to freeze digital onboarding and issuance of credit cards by Kotak Mahindra Bank. They stated that investment in IT capabilities is an ongoing process and cannot be considered completed and postponed.
Previously, technology was mostly about replicating manual tasks. Currently, investments cover various areas such as supporting billions of monthly transactions across channels, enabling integration with other companies and services, using analytics for targeted sales, and using artificial intelligence for customer service without human intervention.
Increasing the apply of technology is of interest to the Reserve Bank of India, which wants to ensure that banks make the necessary investments in systems to handle volumes, protect against fraud and have backups.
“Our IT and cybersecurity spend as a percentage of total spend between 2019 and the current financial year has increased from 5.6% to about 9.4%,” Sandeep Batra, executive director, ICICI Bank, said on the bank’s post-result call. The bank said that spending on technology will continue to grow at a faster rate than total spending, but the dynamics of spending on technology will be moderate due to its high pace.
Bankers said the issues highlighted by the RBI in the Kotak case – IT hardware management, software upgrade, user access control, vendor risk management and data security strategy – are on the RBI’s oversight checklist. “These are issues that need to be continually addressed. The bank cannot say that it has solved the problems once and for all.”
According to Sumant Kathpalia, MD and CEO of IndusInd Bank, the bank spends 8-10% of its total expenditure on information technology. He added that the private lender has a board committee that constantly assesses its technological capabilities.
Yes Bank said its IT spend grew by 17% to Rs 1,108 crore in FY24, accounting for nearly 30% of the bank’s staff spend. Expenses include operating expenses and depreciation. “About 10% of our operating costs come from technology and we are aware that we will continue to invest in technology, information security and infrastructure at our future scale,” a bank official said.
Subrat Mohanty, executive director, banking operations, Axis Bank, said the bank has made the investment to cope with the surge in digital transactions while ensuring system resilience and data security. “This is continuous work that we have been doing for three to four years. “It basically requires a very mighty next-generation technology architecture that separates the core of the banking system from the middleware, and then the middleware from the front-end systems where most of the transactions take place, which is what we did,” he said.
Bankers responded to queries on the level of their IT capabilities in view of the RBI’s action to freeze digital onboarding and issuance of credit cards by Kotak Mahindra Bank. They stated that investment in IT capabilities is an ongoing process and cannot be considered completed and postponed.
Boost
Previously, technology was mostly about replicating manual tasks. Currently, investments cover various areas such as supporting billions of monthly transactions across channels, enabling integration with other companies and services, using analytics for targeted sales, and using artificial intelligence for customer service without human intervention.
Increasing the apply of technology is of interest to the Reserve Bank of India, which wants to ensure that banks make the necessary investments in systems to handle volumes, protect against fraud and have backups.
“Our IT and cybersecurity spend as a percentage of total spend between 2019 and the current financial year has increased from 5.6% to about 9.4%,” Sandeep Batra, executive director, ICICI Bank, said on the bank’s post-result call. The bank said that spending on technology will continue to grow at a faster rate than total spending, but the dynamics of spending on technology will be moderate due to its high pace.
Bankers said the issues highlighted by the RBI in the Kotak case – IT hardware management, software upgrade, user access control, vendor risk management and data security strategy – are on the RBI’s oversight checklist. “These are issues that need to be continually addressed. The bank cannot say that it has solved the problems once and for all.”
Boost
Yes Bank said its IT spend grew by 17% to Rs 1,108 crore in FY24, accounting for nearly 30% of the bank’s staff spend. Expenses include operating expenses and depreciation. “About 10% of our operating costs come from technology and we are aware that we will continue to invest in technology, information security and infrastructure at our future scale,” a bank official said.
Subrat Mohanty, executive director, banking operations, Axis Bank, said the bank has made the investment to cope with the surge in digital transactions while ensuring system resilience and data security. “This is continuous work that we have been doing for three to four years. “It basically requires a very mighty next-generation technology architecture that separates the core of the banking system from the middleware, and then the middleware from the front-end systems where most of the transactions take place, which is what we did,” he said.
