Banks in India are making substantial investments in information technology (IT) infrastructure to fortify their digital capabilities and ensure compliance with stringent regulatory requirements.
These investments encompass a wide array of initiatives, including the development of intuitive user interfaces, bolstering fraud detection and prevention systems, implementing real-time KYC (Know Your Customer) and e-KYC processes, and leveraging advanced cybersecurity solutions to safeguard sensitive customer data. By upgrading their IT infrastructure, banks aim to optimize digital onboarding processes, accelerate loan approvals and disbursals, improve recovery mechanisms, and explore new avenues for cross-selling financial products and services.
The Reserve Bank of India (RBI) directed Kotak Mahindra Bank (KMB) last week to halt the on-boarding of new customers via its online and mobile banking platforms, as well as to suspend the issuance of new credit cards over inadequate IT infrastructure.
What banks are doing
ICICI Bank has significantly ramped up its IT and cybersecurity spending, escalating from 5.6% in 2019 to 9.4% in the fiscal year 2023-24. This investment surge coincided with a 19% year-on-year increase in operating expenses, reaching Rs 39,133 crore in FY24.
HDFC Bank is strategically channeling resources into technology investments aimed at optimizing operational leverage and fortifying its digital infrastructure to meet growing customer demands and technological advancements.
Axis Bank is leading the charge in technology adoption, with IT and digital expenditures accounting for 9.3% of its total operating expenses during the fourth quarter. The bank is spearheading microservices-based cloud adoption and holds ISO certification for cloud security standards.
Uco Bank has outlined a robust IT investment plan, aiming to spend Rs 1,000 crore in the fiscal year 2024-25 to enhance its IT infrastructure. Key focus areas include server upgrades, virtual market solutions, and cybersecurity enhancements to drive digitization, streamline loan processing, bolster recovery mechanisms, and enable cross-selling opportunities.
IndusInd Bank is committed to enhancing its digital and IT capabilities, allocating approximately 8%-10% of its cost-to-income towards these initiatives. The bank’s focus areas include improving user interface (UI)/user experience (UX), strengthening fraud management, and implementing real-time Know Your Customer (KYC) capabilities.
CSB Bank is dedicating 7%-8% of its operating expenses to bolstering IT services, with ambitious plans to further ramp up investments in the coming years. The bank is undertaking a comprehensive technology overhaul to establish a modern, future-ready banking framework.
Bank of Maharashtra has earmarked substantial funds, with Rs 800 crore allocated in 2023 and an increased budget of Rs 900 crore in 2024 for IT and digital services. The bank is poised to invest over Rs 1,000 crore in 2024 to advance its IT and digital infrastructure.
