Banking Technology vendors likely beneficiaries of E-Commerce boom

It may not be a windfall gain but definitely signals an increase in potential business opportunity. The rise in e-commerce and e-commerce driven transactions has meant a significant jump in banking transactions. Numbers clearly validate this story. Industry-wide data provided by the Reserve Bank of India (RBI) website suggests that outstanding credit card loans stood at Rs.30,300 crore as on 31 December 2014, up 24% from Rs.24,400 crore a year ago. This scenario means that banks now have to deal with much more data than ever before and a robust and scalable IT infrastructure is the order of the day.

Therein, lies the opportunity for banking technology vendors. Imagine this: after a detailed search on deciding what to gift a family member, a consumer is not able to buy the product online as the payment gateway fails. A few customers may retry but most e-commerce vendors have lost the client forever. One of the aspects which could have gone wrong in this case is that investments in IT infrastructure have not kept pace with the growth in the bank's business. Servers, for example, form the foundation of any bank's IT infrastructure. Banks need to have a long-term view of customer acquisition goals and expected business growth to build a long-term view of the server technology to be adopted. The bank's IT vendor, in this case, has an important role to play in recommending the right IT infrastructure linked to the long-term vision.

Vendors recognize the opportunity that exists but are also sure that a one-size-fits-all approach will not work. Acer, one of the leading vendors in enterprise servers has provided a comprehensive IT infrastructure platform to a host of public sector banks. "Banks definitely have the first-mover advantage when it comes to technology adoption," as per Mr. S. Rajendran, Chief Marketing Officer, Acer India. "Banks however, in my opinion, have to move quicker in terms of decision making when it comes to buying or upgrading IT infrastructure. Undue delay in today's connected world can mean loss of customers and ultimately decline in business".

Some reports suggest we have only hit the tip of the iceberg. A recent study by the Boston Consulting Group (BCG) estimates that e-commerce spending would grow to $60-70 billion in the next three-four years, from $16-17 billion now. Not only would vendors need the right technology to offer banks at that time but they would need to have consultants who can advise banks on leveraging their existing IT investments. Therefore, no longer will IT infrastructure decisions be only about the right technology, but more about the right consultancy. Vendors such as Acer have realized this and are building consultancy teams geared to guide enterprises for the long-term.