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BFSI segment is going through a period of evolution

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Shrikanth
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mohit joshi

In an exclusive interview to DATAQUEST,  Mohit Joshi, President and Global Head of Financial Services, Infosys talks about the IT adoption dynamics in the BFSI segment and gives a ground zero perspective. Excerpts.

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What would be your appraisal of the BFSI space - are you seeing strong headwinds shrinking growth?

For the past two years, our relentless focus has been in redefining the way we help clients address business challenges. We are working with our clients in their digital journey, helping them compete and grow. Our efforts and investments have definitely given the edge and our Q-o-Q growth stands testimony to our strategy. What stands out for me is that while we are strengthening our footprints in core areas like ADM we are making inroads in to new areas like Automation and AI.

From an overall market perspective, I feel that BFSI segment is going through a period of evolution. However, in the light of recent events, there are some headwinds of short-term in nature owing to Brexit and the political change, but I don't see this impacting demand in long term. Many industry experts have outlined the same in their predictions for 2020 - the FS IT spend is expected to grow by CAGR of 5% for North America and Europe. This trend clearly highlights how FS growth remains steady in the medium and long-term.

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However, given real-time scenarios like Brexit or an ever-changing political climate, one critical lesson that the BFSI sector has experienced is the uncompromising need to be "future-ready and crisis-proof".  This clearly demands need for a change in financial systems to account for alternative outcomes around regulation, compliance, currency handling, money laundering and data handling. Banks need to embrace new technologies and data strategies to be more adaptive and agile to change.

Are BFS buyers taking a conservative approach to IT buying right now and if yes, why?

I do not see it as conservative approach. I see it more as wait and watch strategy due to macro-economic scenarios outlined earlier. This is a short-term phenomenon which in medium and longer term should normalize.

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New technologies, new competition is changing the very structure of the Industry. Technology investments directly impact business competitiveness, and are difficult to put-off over a longer period. Stand-out BFSI organizations will be able to extract maximum value out of investments.

BFSI sector is increasingly investing in modernization to upgrade their legacy systems, and in various digital trends like data and insight-driven solutions. Many analysts predict that big data in banking will be sizeable opportunity in excess of $20 billion by 2020. Secondly, with cybercrime taking the lead as one of the biggest threat to the financial services today, security of assets and data is of utmost importance. Also, being digital ready is key to building agile customer centric processes - we see these programs as essential building blocks to larger digital transformation programmes.

Can you comment on the BFS IT spending patterns and what are they investing on in terms of IT?

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As discussed earlier, the Financial Services sector IT spending has healthy spread - and primarily the focus is around digital transformation, risk and compliance, data and analytics. Almost every financial activity is being reimagined by digital transformation, and hence, financial service providers need to quickly take advantage of the digital Journey.

Secondly, securing data is pivotal - in fact, the spend on cyber security is slated to rise significantly as well. We see Financial Services Industry leading the way in adopting DevOps - to release products faster, efficiently and safely.

In addition, Automation and Artificial intelligence will be all encompassing and investments in this sector will surge, to enable efficiency and increase productivity over the years. Last but not the least, blockchain technology is set to influence the financial sector to a considerable level and will see lot of investments.

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Do you think Indian IT players have over dependence on BFSI and is it time to diversify their vertical play in terms of revenues?

The fact to be considered is that BFSI is the largest IT spender in the world, as they invest a lot in transformation, regulatory compliance etc.. Going by that, I see - Indian IT players are aligned to them. At Infosys, we are well diversified with healthy mix of revenues from across the sectors. Within BFSI, we have different client segments like large banks, regional banks, investment banks, asset managers etc. and have a well balanced portfolio.

However, there are smaller service providers that need to diversify to hedge over dependence on a client or a sector.

That said, the market and demand for IT in the BFSI sector is significantly large, providing ample opportunities for different players to grow. However, to succeed, service providers need to be differentiated in their approach to meet growing digital needs.

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