Indian IT services firms are seeing huge opportunities in the Indian banking space thanks to evolving regulatory challenges, growing footprint of fintech firms and more recently mergers between state-run banks.
Wipro recently signed a $300 million digital transformation deal with ICICI Bank. Infosys signed a deal with a co-operative bank in India.
This is a welcome development given the softness that IT firms are seeing in the banking sector globally. Some reports have pegged this opportunity to be close to $3-5 billion.
Banking is one of the largest revenue verticals and most IT firms such as Tata Consultancy Services (TCS) and Infosys reported a decline in growth in the last two quarters. Companies said they expect the softness to continue in the current quarter (Q2) as well.
In a recent conversation with Moneycontrol, Mitesh Agarwal, Vice President Sales – Global Key and Lead Accounts, Oracle India, said unlike the global scenario where banks are slashing expenditure, the situation in India is quite the opposite as banks here are investing heavily in technology to keep up with changing regulatory needs in terms of security and customer demands.
Banking is one of the largest business verticals for the Indian entity and it is working with top 10 banks in the country on digital transformation.Where are the opportunities coming from?
Chirajeet Gupta, Partner, Everest Group, a consultancy firm, said, “Indian banks are sophisticated. So, their technology requirements are high.”
For example, regulatory requirement around security, especially for online transactions, are tighter. Indian banking transactions would require two factor authentication, which might not be the norm in other countries.
In addition, payments industry is very active and players such as Patym are gaining market share. This is leading banks to invest further on technology. Banks such as HDFC have invested heavily in technology transformation.
Also, banking is no longer about products or services. The industry is taking a whole different shape now. It has become like the lifestyle business. There are challenges such as how to integrate fintech solutions with core banking solutions or how do you offer personal finance advice online on the banking platform.
Recent merger of 10 banks into four will also open up IT services opportunities. All these are driving domestic banking business. But will it be enough to make up for the global softness?
Gupta said the banking industry is definitely fast-growing and offers meaningful growth for IT service firms.