Introduction Introduction to BFSI: BFSI stands for Banking, Financial Services and Insurance. The BFSI Domain broadly represents the Financial Sector. The BFSI term is commonly used by IT / ITES companies offering products and services in this domain.
First broad category of BFSI covers Banking. Banking includes Retail Banking, Corporate Banking and Investment Banking. Retail Banks mainly cater to individual customers. Corporate Banks mainly cater to Corporates. Investment Banks help their clients raise money from the market by issue of equity shares, bonds. There There are global global banks banks which have a presence presence in in retail retail banking, banking, corporate corporate banking and investment banking. Banks like Citigroup, HSBC, and Barclays have presence all over the globe and cater to all types of customers in retail, corporate and investment banking categories. The second broad category of BFSI covers Financial Services Financial Services includes Mutual Funds, Broking Firms, Non Banking Financial Companies (NBFCs). A Mutual Fund is a company which collects small – small amounts of money from a large pool of investors who have surplus funds and invests the money in the equity markets, bond markets on behalf of investors. The profits are shared with the investors. There are different types of mutual funds based on their investment objectives. Equity Fund: This type of fund invests a major portion of its funds into Equity Shares. The aim is to provide high returns to investors in the form of capital appreciation. This fund is for those investors who are willing to take higher risks. Debt Funds: This type of fund invests a major portion of its funds into Government Securities, Corporate Bonds and Fixed Deposits. The aim is to provide steady and regular income to the investors. This fund is for those investors who don’t have a high appetite for risk. Balanced Funds: This type of fund invests in a mix of both Equities and Debt. The aim is to provide both growth and regular income to investors. This fund is for those investors who are willing to take moderate risk. Some of the biggest mutual funds are Prudential Mutual Fund, Principal Mutual Fund and Unit Trust of India (UTI) Mutual Fund. Brokerage Firms: Broking Firms provide Equity, Commodity and Currency trading services. Equity broking firms provide trading services related to buying and selling of equity shares, Initial Public Offering (IPO) services. Some of the equity biggest broking firms are Morgan Stanley and E-Trade. Commodity broking firms provide trading services related to buying and selling of commodities. Commodities are broadly divided into 3 broad categories: Precious metals like Gold, Silver and Platinum Base metals like Aluminum, Copper, Zinc, Steel, Nickel and Crude Oil Agricultural Commodities like Wheat, Soya Beans, Sugar, Tea and Cotton. Some of the biggest global commodity broking firms are MF Global. Currency Broking Firms provide trading services related to buying and selling of Currencies like US Dollar (USD), Indian Rupee (INR), Euro and Japanese Yen.
Non Banking Financial Companies are mainly in the business of providing loans. They cater to requirements of individuals by providing Home Loans, Personal Loans and Auto Loans and also cater to the requirements of Corporates by providing Working Capital Loans, Project Finance and Asset Purchase Loans. Insurance includes Life Insurance, Health Insurance and General Insurance. Life Insurance provides security in the event of any mishap to the life of a person insured. Life insurance protects the insured person’s family. Life insurance covers the loss of income and provides the funds to pay for the financial obligations of insured person in case of death or disability of the insured person. Life Insurance plans available in the market include Term Plans, Money Back Plans, Endowment Plans and Unit Linked Insurance Plans. Some of the biggest global life insurance companies are American Insurance Group (AIG), AXA Group and Life Insurance Corporation (LIC). General Insurance: Insurance other than Life Insurance and Health Insurance falls under the category of General Insurance. General Insurance provides protection against damage and loss of property and goods. Most common types of general insurance are Vehicle Insurance, Fire Insurance and Marine Insurance. Some of the biggest general insurance companies are Lombard Insurance, Allianz Insurance. Health Insurance: Health Insurance provides protection against financial loss from illness, injury and accidents.
That was a brief overview of the BFSI sector, the constituents and the companies in the domain. This course will cover the Retail Banking part of the BFSI pie in detail. Many companies specializing in the BFSI domain have come up with standard Core Banking Solution (CBS) products or cater to banks by providing customized Core Banking Solutions (CBS). The BFSI domain is a highly sophisticated one and requires specialists who understand the business of Banking and Finance. The BFSI industry is constantly evolving and new complex products are being introduced which bring about complexity in daily operations and hence the need for specialists who understand this industry well.
