HDFC Bank's IT expense 7% of total spending, says senior executive

Digital investments part of lender's 'transformation journey', says Parag Rao

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HDFC Bank’s investment in information technology (IT) is around 7 per cent of its total spending, said the senior executive of India's largest private sector lender on Tuesday.

HDFC Bank’s operating expenditure in the financial year 2023-24 (FY24) increased by 33 per cent to Rs 63,390 crore from Rs 47,600 crore last year. “Initially, the capex (capital expenditure) would be slightly higher and the opex (operating expenditure) would have been lower. And now, as systems get commissioned, opex starts going up and capex starts coming down. So, it is a typical investment-cycle kind of spending. On average it's about 6-7 per cent,” said Parag Rao, country head – payments, liability products, consumer finance & marketing, HDFC Bank.

“We have undertaken a transformation journey, which is a three- to four-year journey. A key part of the transformation is digital investments or investments in tech,” said Rao.

HDFC Bank recently launched PayZapp, a payment services app, with nearly 10 million customers – a step that marks the growth of its digital business.

Indian banks have been increasing their technology spending to expand their digital capabilities.

IDBI Bank, another private lender, will increase its IT expenditure to 8-9 per cent of operational expenditure in the medium term from 6.5 per cent in FY24.

“We have immediate plans to invest in digital solutions, analytics, AI (artificial intelligence) and continue investment in IT Infrastructure including data centres and Cloud. Expenditure is likely to increase gradually to 8-9 per cent,” Rakesh Sharma, managing director and chief executive officer of IDBI Bank told ‘Business Standard’ recently.

IDBI Bank is increasing investments to improve employee skills and strengthening subsidiary IDBI Intech, he said. In absolute terms, IDBI Bank will increase its operating expenditure to Rs 560 crore in FY25 from Rs 330 crore in FY24. Capital expenditure will increase from Rs 180 crore in FY24 to Rs 400 crore in FY25.

Private sector lender YES Bank’s technology and IT spend comprises nearly 10-11 per cent of its overall operating expenses. IndusInd Bank, another private lender, has said it continues to evaluate and invest in technology infrastructure and is spending nearly 8-10 per cent of its total cost-to-income on IT.