SWOT ANALYSIS OF BFSI

Strengths

 Banking is as old as Human race : Banking industry is the driving force to

any nation. It helps in shaping the life of human race may be some time
merely by Exchange (which was called barter system), or by transaction or
by facilitating advances.

 Source of employment & GDP growth : There is a consensus among

economists that development of the financial system contributes
to economic growth. Financial development creates enabling conditions for
growth through either a supply-leading (financial development spurs
growth) or a demand-following. It is this industry which continuously works
to secure financial stability, facilitate international trade, promote
employment, & reduce poverty around the world.

 Hedge from risk : Whether it is natural calamity or man-made calamity

banks mitigate the after effect of the destruction by providing financial
support to the victims to stand –up & lead a peaceful life again.

 Diversified services: Banking industry offer services from CASA to

insurance, to loan, to investment.

 Connecting People: With the advent of new age technological advancement

Banks have made the life of the common man easier. People can transact on
real time basis in many places.

 Changing from mere savings & loan facilitator role: Top priorities of
banks now days include regulatory compliance, improving asset quality,
enhancing customer centricity, focusing on digital convergence, and tackling
competition from non-banks. Banks are therefore making business
and technology investments to change their business models.

Weaknesses
 1. Lack Of coordination: The global banking industry faces short-term
uncertainty due to the debt crises that challenge several major economies.
Industry assets stand at $143 trillion (2013)&the EU is the largest regional
market, with over 57% of the global market. Volatility in different
market/Currencies has created problems for the banks in order to work
properly across the borders.

2. Vulnerable to risk: Since this sector deals with finances, it is the most risky
sector which can change the fate of any business/Industry.

3. High NPA’s: Rise in Retail & corporate NPA’s (Non-performing assets) is

the single major issue this sector is going through worldwide.

4. Can’t reach to Under-penetrated market: Due to several conflicting

objectives of government & banks which goes hand in hand, rural areas of
developing nations are still not in the shadow of banks. Although PMJDY
(PradhanMantri Jan DhanYojna) implemented by the Indian banks got
acknowledged by World Bank for financial inclusion but the Idea is not fully
capitalized even in the home country.

5. Structural weaknesses such as a fragmented industry structure, restrictions

on capital availability and deployment, lack of institutional support
infrastructure, restrictive labor laws, weak corporate governance, Political
pressure and ineffective regulations.

Opportunities

1. Expansion: Penetrating to the rural markets & bringing the rural masses
under the purview of organized banking will be the objective of the Banks in
decades to come.

2. Changing Socio-cultural & demographic factors: Given

the demographic shifts resulting from changes in age profile and household
income, consumers will increasingly demand enhanced institutional
capabilities and service levels from banks.

3. Rise in private sector banking: Banking Industry across the world is

highly regulated &lead by PSU’s with their respective central banks. With
 the advent of private sector banks this sector is going through structural &
functional changes mainly due to the adaptation of the advanced
technologies & increased competition thereby benefiting to the end
customers.

Threats

1. Recession: It is one of the major threats to the financial system of the nation.
Traumatic shock of Economic crises & collapse of the several businesses
can affect the banks and vice-versa.

2. Stability of the system: Failure of some weak banks has often threatened
the stability of the system.

3. Competition: Competition from NBFC’s (Non-banking financial

companies) like insurance companies & mutual fund companies can affect
the business of Banks.