February, 09 , 2010

Against popular opinion, overspending on information technology (IT) is proving to be a major dampener in banks’ performance. Massive capital deployment is hampering expansions beyond the top 100 towns in the country, say industry players and observers.Technology spending is only second to manpower costs of banks. Small and large institutions don’t have a choice but to invest in technology to stay in business.

Centralised banking services, withdrawals from ATMs, internet and mobile banking are fast becoming norms in the industry.However, in a frenzy to adopt technology, banks are investing heavily without analysing their actual requirements, says B Suresh Kamath, managing director and chief executive officer of Laser Soft Infosystems, a subsidiary of Polaris Software Lab.“Tier-I banks with over 1,000 branches spend about Rs 500 crore as initial investment and close to Rs 150 crore every year on maintenance.

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