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Banking & Finance Sector-OpportunityforHitachi
Banking & Finance Sector-OpportunityforHitachi
Banking & Finance Sector-OpportunityforHitachi
(BFSI) Sector
- Opportunity for Hitachi
Table of Contents
1. BFSI Sector in India 1
1.1.
Introduction
1.2.
SWOT Analysis 2
1.3.
1.4.
2. BFSI Institutions/Organizations
1
2.1.
Categories of BSFI Institutions 1
2.2.
Category wise List of All BFSI Institutions
2.3.
Demographic & Other Trends 1
3. Opportunities for Hitachi
3.1.
3.2.
3.3.
About Hitachi 1
SWOT Analysis 1
Business opportunities in BFSI Sector 1
INTRODUCTION:
Banking, financial services and insurance (BFSI) is an industry term for companies that
provide a range of financial products/services. Banking may include core banking, retail,
private, corporate, investment, cooperatives and the like. Financial services may include
stock-broking, payment gateways, mutual funds, non-banking financial companies, pensions
funds, mutual funds and other smaller financial entities etc. Insurance can be of two types:
life (e.g. life insurance, health insurance) and non-life (e.g. general insurance like insurance
of car, bikes etc.).
1.2.
STRENGTH
WEAKNESS
OPPORTUNITY
THREAT
1.3.
Force 1 - Bargaining Power of Buyers: All banks normally offer services that are
homogeneous in nature. Therefore, customer possesses all knowledge of how banks work
and what kind of services are on offer. Customer has a high bargaining power and low
switching cost. Factors affecting bargaining power are: long-term finance, competitive banks,
availability of large no. of alternatives, margins and volumes. Customer loyalty and
technology used also makes a difference in power of buyers.
Force 2 - Bargaining Power of Suppliers: Bargaining power of suppliers is low in BFSI
Industry as there are many rules and regulatory norms set by RBI for the BFSI companies.
Few alternatives available which lowers bargaining power. Suppliers are risk averters and
want regular income. Bank is safe option than other investment alternatives. So, they do not
consider other alternatives very seriously, which lowers their bargaining power. The factors
affecting bargaining power of supplier are RBI involvement, rise in investment avenues,
providers of funds, interest rates and valuations, overseas operations, economic outlook of
country.
Force 3 - Competitive Rivalry: Competition in BFSI sector is intense because of presence
of Public, Private, Rural, Cooperative, Foreign, Investment Banks, Insurance companies and
NBFCs. Acquisitions and mergers also are a result of increased rivalry. Factors affecting
competition: all banks provide nearly homogeneous services, price being the only
competitive advantage, players are of same size with similar strategies, barriers of exit are
high and growth rate of market is low.
Force 4 - Availability of substitutes: Threat from substitutes is high especially from NonBanking Financial Companies (NBFCs) with good market share as well as from mutual
funds, small cooperative banks, T-bills, Government securities, debentures, gold, real estate
etc. The rate of return with using investment houses is also greater than a bank. Factors
affecting this are: low switching cost of customer, risk-taking attitude of customers and so on.
Force 5 - Threat of new entrants: Due to stringent RBI norms, high initial investment and
high barriers to entry and exit the threat of new entrants is low in BFSI Sector. Although it is
worthwhile to mention that barriers to entry in banking industry are less and many private
and foreign banks are entering in the market. Government policies are becoming more
supportive to start a new bank with less statutory requirements. According to FDIC between
1977 and 2002 an average of 215 new banks opened in India. Factors affecting new entrants:
customer switching costs, undifferentiated product, market growth, regulations, accessible
distribution, skilled manpower, entry of foreign banks.
2. BFSI INSTITUTIONS/ORGANIZATIONS
2.1.
2.2.
2.2.5. List of BFSI institutions listed in top 100 NSE listed Companies with contacts
ABOUT HITACHI
Hitachi India Pvt. Ltd. (HIL) markets and sells a wide range of products ranging from Power
and Industrial Systems, Industrial Components & Equipment, Air Conditioning &
Refrigeration Equipment to International Procurement of software, materials and
components. Some of Hitachi India's product range includes Semiconductors and Display
Components. Hitachi also supports the sale of Projectors, and Interactive White Boards
(StarBoard).
Some interesting facts about Hitachi: (Source http://www.hitachi.co.in/about/hitachi/index.html)
Hitachi first started out as an electrical repair shop for a copper mining company in Hitachi City.
Hitachi's first products were electric motors.
Hitachi, Ltd. was established in 1910.
It took Hitachi 84 years to establish the 4 regional headquarters.
The inherent meaning of is corporate statement "Inspire the Next" means to breathe life into the
coming age.
Hitachi is responsible for generating about 50% of Singapore's electric supply.
The majority of mobile phones in Europe have a Hitachi component in them.
Hitachi developed the Automated Teller Machine (ATM) which enables bills to be pressed and
disinfected in 1994.
Hitachi developed the world's 1st 4.7 GB DVD-RAM standard compliant DVD Camcorder in
2000.
In the Japanese context, "Hi" means "Sun" while "tachi" means "Rise" which is why HITACHI is
known as "Sunrise" i.e. "ri li" in Chinese/Japanese.
3.2.
W - Weaknesses
Systemic
High debt burden
Cost structure
Bad acquisitions
competitor
India 2014 : 6% increase in market share
Aided HHLS in declining U.S. market
growth
Differentiation:
O - Opportunities
Innovation
Online market
Emerging market
Benefits in further maintaining costs to
T - Threats
Bad economy
Change in tastes
Volatile currency
3.3.
According to the 15th census of India, 2011, only 58.7 per cent of households were availing
banking services in the country. While compared to the previous census 2001, there is a
significant improvement in access to banking services, it indicates that still over 40 per cent
of India's 1.2 billion people remain financially excluded.
3.3.1. Public and Private Sector Banks:
Scope:
India's banking system is dominated by state banks, which accounted for more than twothirds of industry assets at the end of March 2012, the latest RBI data showed. Sanjiv Bhasin,
the India CEO at the Singapore-based DBS Bank says, "If the Indian economy grows at 5%,
the financial services sector will typically grow three times faster, at about 15%."
According to a master circular issued by RBI in 2013, domestic scheduled commercial banks
(other than RRBs) in rural, semi-urban and urban centres have been given permission to open
branches in North Eastern states and Sikkim without prior permission from RBI. Banks are
encouraged to open branches in underbanked districts and rural centres and a list has been
provided by RBI of these underbanked areas. RBI has also made mandatory that 25% of new
private sector bank branches are in semi-urban and rural centres on an ongoing basis. Where
the banks do not find it viable to open branches in rural areas, they may open Satellite
Offices. Extension counters of banks are allowed to be opened in the premises of banks.
Also, RBI has permitted Scheduled Commercial Banks to install Off-site/Mobile ATMs at
centres/places identified by them, without permission from the Reserve Bank.
Challenges:
Intensified competition
Opportunities:
A growing economy,
Banking deregulation,
12% of respondents ranking south-east Asia and the Middle East as the most attractive. None of
the respondents felt that India was the most attractive investment destination.
48% of respondents ranked regulatory environment as the most difficult aspect of the banking
industry.
19% said political uncertainty was a key challenge.
Foreign banks face added complexity on compliance with capital requirements.
Indian market is not perceived to be ready for sophisticated financial products.
69% of respondents said that lack of branches was the topmost concern for them.
Increasing no. of NPAs
Opportunities:
Around 70% of respondents perceived India to be a huge market for their banks products and
services.
70% respondents agreed that foreign exchange and corporate lending were major areas
contributing to growth of the foreign banks.
SMEs are very much on the agenda for foreign banks operating in India.
Social, mobile, analytics and cloud (SMAC) is the new buzzword across the banking landscape,
professed to be a huge catalyst for growth of the banking sector as a whole.
Most foreign banks are not really present in the retail segment so opportunity lies there.
Government removed cap on single-brand retail and allowe multi-brand retail for overseas
companies.
Foreign Banks are facilitating Indian banks with limited resources to be internationalized as they
have vast network.
3.3.3. Investment Banks: Scope, Challenges and Opportunities
Scope:
Challenges:
Opportunities:
3.3.4. Insurance Companies: Scope, Challenges and Opportunities
Scope:
Challenges:
Opportunities:
3.3.5. Regional Rural Banks: Scope, Challenges and Opportunities
Scope:
Challenges:
Opportunities:
(b) Long term lending oriented Co-operative Banks - within the second category there are
land development banks at three levels i.e. State level, District level and Village level.
Scope:
Challenges:
Opportunities:
3.3.7. NBFCs
(Non-Banking
Financial
Company):
Scope,
Challenges
and
Opportunities
Non-Banking Financial Companies (NBFC) have rapidly emerged as an important segment
of the Indian financial system. Moreover, NBFCs assume significance in the small business
segment as they primarily cater to the credit requirements of the unorganised sector such as
wholesale & retail traders, small-scale industries and small borrowers at the local level.
NBFC is a heterogeneous group of financial institutions, performing a wide range of
activities like hire-purchase finance, vehicle financing, equipment lease finance, personal
loans, working capital loans, consumer loans, housing loans, loans against shares and
investment, etc. NBFCs are broadly divided into three categories namely (i) NBFCs
accepting deposits from banks (NBFC-D); (ii) NBFCs not accepting/holding public deposits
(NBFC-ND); and (iii) core investment companies (i.e. those acquiring share/securities of
their group/holding/subsidiary companies to the extent of not less than 90% of total assets
and which do not accept public deposits.)
While the functions of NBFCs are just like banks, there are few differences between both the
institutions. These are:
(i)
(ii)
(iii)
Scope:
The segment has witnessed considerable growth in the last few years and is now being
recognised as complementary to the banking sector due to implementation of innovative
marketing strategies, introduction of tailor-made products, customer-oriented services,
attractive rates of return on deposits and simplified procedures, etc.
Challenges:
Opportunities:
NON-PROCESSING AREA
Related Commercial and Office Buildings
International Techno Park & International Service Apartments & Residential Flats
Market Zone
Commodity Exchanges
Insurance
Offshore Banking
Medical Centre
IT/ ITeS
Regulators Offices