Banks are investing large sums of as much as 10% of their operating expenses to upgrade their IT systems and comply with regulatory norms, even as they cope with the rising number of online transactions.
Sandeep Batra, executive director, ICICI Bank, said in the last week that IT resilience and customer security were of paramount interest to the bank. “This is not constrained by any budget. In fact, since 2019, our IT and cyber security spends, as a share of overall spends, have moved up from 5.6% to about 9.4% now,” Batra said.
HDFC Bank is also investing meaningfully in technology, MD & CEO Shashidhar Jagdishan said. “We will continue to invest in distribution, people and technology. In fact, our operating leverage will be harnessed over a period of time to using enhanced tech and digital infrastructure,” Jagadishan said
Axis Bank’s technology and digital spends constituted 9.3% of total operating expenses of Rs 9,319 crore during Q4. Amitabh Chaudhry, MD & CEO, said the strong position of the bank’s products was due to the continuous investment in people, process and technology over the past five years. “We have early leadership in micro services-based cloud adoption, and are the first Indian bank to be ISO certified for its AWS and Azure Cloud security as part of commitment to open API ecosystem.
Chaudhry said the lender now offers a wide stack of 410-plus APIs on its developer portal.
Sumant Kathpalia, MD & CEO at IndusInd Bank, said the bank spends around 8%-10% of its cost-to-income on digital and IT capabilities. “IT infrastructure can especially be dedicated towards developing better UI/UX experience, fraud management, shoring up KYC and e-KYC capabilities on real time and online basis,” he said.
CSB Bank managing director and CEO Pralay Mondal told FE that it spent 7%-8% of its operating expenses on building IT services and the amount will only rise in the next three-four years. “Our maximum investment is in technology. Most of the IT system will be new-age and the best in class. We are building a new bank by rebooting technology completely,” he said.
Bank of Maharashtra’s MD and CEO Nidhu Saxena said the lender is allocating funds for IT. The lender spent Rs 800 crore in 2023 for IT and digital services, Rs 900 crore in 2023 and is aiming to spend upwards of Rs 1,000 crore to upgrade IT and digital infrastructure in 2024. “A proper mechanism will be put in place to check how many new accounts are being opened digitally) how many debit cards are being issued, how many are actively doing mobile banking transactions.”
Over the past several years the regulator has pulled up lenders for inadequate IT infrastructure and has barred them for activities such as on-boarding clients digitally or issuing credit cards. Last week, Reserve Bank of India (RBI) asked Kotak Mahindra Bank (KMB) to stop on-boarding new customers through its online and mobile banking channels and to stop issuing fresh credit cards.