BFSI Banking: The World of Finance

BFSI Banking

BFSI Banking, financial services, and insurance is a term used for companies that provide a range of such financial products or services such as universal banks.  BFSI comprises non-banking financial companies, cooperatives, pension funds, commercial banks, insurance companies, mutual funds, and other financial entities.  Banking may include core banking, corporate, investment, cards, retail, private and the like.  Financial services may include payment gateways, stock broking, mutual funds, etc.  The insurance covers both life (living) and non-life (non-living).

This term is majorly used by information technology (IT)/information technology enabled services (ITES)/business process outsourcing (BPO) companies and technical/professional services firms that manage data processing, application testing, and software development activities in this domain.  The BFSI is set to grow gradually in India due to the rising per capita income, the introduction of new products, expanding distribution, and customer awareness of financial products.  This industry has seen bold reforms in the past years and will continue to be a top priority focus industry for India’s economic development based on inclusive growth.

The global BFSI industry faced serious problems during the early period, when a series of crisis like the subprime mortgage crisis in the US, and the Great Recession worldwide that began in 2008 and ended in 2009, gave a huge setback resulting in negative growth.  However, reports say that the industry is now coming back on track, and is gaining pace a path of recovery.

Key Challenges in BFSI


  • Increasing bank facilities in rural areas.
  • Tackling demand-supply mismatch.
  • Credit disbursement to the priority sector.
  • Maintaining asset quality.
  • To improve risk management mechanism.
  • Technology adaption.


  • Need for accuracy in pricing of risks.
  • The rural market is still under-penetrated.
  • Pension market remains untapped.

Mutual funds:

  • Low level of customer awareness.
  • The inadequate reach of funds or distributors to retail investors.
  • Limited innovation in the product offering.
  • Multiple regulatory frameworks.


  • New and wider products will provide many opportunities to develop niche areas.
  • The industry has adopted IT as an integral part of business strategy, where RSM is well positioned to provide various services on such information technology platforms.
  • High supervision by regulators will require vigilance and need to adopt measures to mitigate risks based on various control measures including Risk Based Audits (RBA) as provided by the Reserve Bank of India in its RBA guidelines to banks, The Insurance Regulatory authority of India (IRDA) to the insurance industry, and the Securities Exchange Board of India (SEBI) for the mutual fund industry.

Concurrent audits:

Concurrent audit is examination which is contemporaneous with the occurrence of transactions or it is carried out as near as possible.  It attempts to shorten the interval between a transaction and its examination by an independent person who is not involved in the documentation.  This audit is a management process and it is integral accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations.


The above-said are some of the key challenges and opportunities that the Banking, Financial, and Insurance (BFSI) face today.