Lines are Blurring in Tech Spends: A Closer Look at the Indian Financial Services Sector

Updated – June 28, 2024 at 08:17 PM.

Table of Contents

Anirban Bose, CEO, Financial Services, Capgemini Anirban Bose, CEO, Financial Services, Capgemini

Tech Adoption in India

Anirban Bose, CEO of Financial Services at Capgemini, highlights the significant strides made by Indian financial institutions in incorporating technology into their operations. Comparing the tech spends of Indian banks (10% of operating expenses) to those in the US (25%), he emphasizes the growing importance of technology in the Indian financial landscape.

Technology in Financial Services Segments

India’s Position in the APAC Region

According to Bose, India has taken a leading role in tech-led innovations, particularly evident in advancements like UPI payments and initiatives by the RBI. He notes the enthusiasm of the younger Indian population towards digital solutions, setting the country apart in the APAC region.

Segments Embracing New Technologies

Banking emerges as the frontrunner in adopting new technologies, leveraging innovations like GPT, cloud data, and APIs. Additionally, developments in areas such as crypto assets and insurance technology signify a broader shift towards digital transformation in the financial sector.

Money Deployment into Technology

An optimistic view on India’s tech investments is shared, with Bose anticipating significant growth in tech expenditures surpassing various countries. Drawing a comparison with the US, where 25% of operating costs are dedicated to technology, India’s current 10% expenditure showcases room for expansion in tech deployments.

Introduction:

In the rapidly evolving landscape of technology adoption and digital transformation, the distinction between CapEx and OpEx is becoming increasingly blurred. This phenomenon is not limited to the banking industry but is evident across various sectors. The shift towards emphasizing operational expenses over capital expenditures signifies a fundamental change in the way organizations approach technology investments. This shift is driven by the imperative to enhance efficiency through automation, leverage advanced technologies like AI for predictive analysis, and prioritize ethical considerations. In the context of the banking sector, regulatory frameworks play a pivotal role in shaping operational strategies, especially in the context of emerging technologies and evolving business models.

Are the lines blurring on what is CapEx and OpEx when it comes to tech spends?

The convergence of CapEx and OpEx is a prevailing trend not only in the banking industry but also in various other sectors. The traditional distinction between capital expenditures and operational expenses is undergoing a transformation, with a growing emphasis on increasing operational costs and reducing capital outlays. Organizations are redirecting their focus towards automation to drive efficiency gains. The integration of AI and advanced technologies, such as GenAI, is geared towards enhancing predictive capabilities and optimizing decision-making processes. Additionally, there is a shift towards a more targeted approach, where unstructured data is effectively leveraged to provide specialized services to customers. However, the ethical implications of leveraging AI technologies remain a critical aspect, as biases can amplify if not appropriately addressed. Particularly within the financial services sector, regulatory compliance and ethical considerations are paramount due to the industry’s strategic significance.

In India regulations are now a continuously evolving thing, especially in the last two years. How does this comfort you when you operate in the country?

Regulatory frameworks hold significant importance in the global banking sector, where adherence to regulations precedes all operations. Acquiring a banking charter is a challenging endeavor, prompting many Fintech organizations to operate on the fringes of traditional banking activities, focusing on areas like payments and wealth management. The emphasis on resiliency and regulatory compliance is crucial for navigating the dynamic regulatory landscape, particularly in jurisdictions like India where regulations have undergone substantial changes in recent years.