Detailed SWOT Analysis of IDFC First Bank – An Indian Private Sector Bank

Quick Stats on IDFC First Bank

Founder	V. Vaidyanathan
Year Founded	2015
Origin	Mumbai, India
No. of Employees	20,000+
Company Type	Public
Market Cap	Rs 26,135.09 Crore (2022)
Annual Revenue	US$620 Million (2020)
Net Income/ Profit	Rs 151.7 Crore (2021)

 

Products & Services by IDFC First Bank

• Consumer banking
• Credit cards
• Home loans
• Loans against property
• Personal loans
• Consumer Durable loans
• Vehicle loans
• Business loans
• Micro-Enterprise loans
• Private banking
• Wealth management
• Investment banking
• Corporate banking
• Wholesale banking

Competitors of IDFC First Bank

• HDFC Bank
• TriState Capital
• Bank Hapoalim
• Piraeus Bank
• Heritage Bank
• Bank Leumi

Now that we have an understanding of the company, let us dive into an in-depth SWOT analysis of IDFC First Bank.

SWOT Analysis of IDFC First Bank

SWOT analysis is a framework used to assess a company’s competitiveness and make strategic plans. SWOT analysis assesses internal and external factors as well as current and future potential. SWOT analysis is a strategic planning tool that AU managers can use to perform situational analysis of their organization.

To better understand the SWOT analysis of IDFC First Bank, refer to the infographic below:

So from the following SWOT Analysis of IDFC First Bank, let us first have a look into the strengths of IDFC First Bank.

Strengths of IDFC First Bank

Strengths are the positive points of the organisation that help it to grow its position in the market and lead to the company’s success. Here are the strengths of IDFC First Bank:

• Healthy Customer Base: In 2021, IDFC First Bank had a customer base of around a whopping 7.3 million people and has been growing ever since. It has also listened to its customers’ financial needs and built strong relationships with them through one-on-one contact.
• Broad Range of Portfolio: One biggest strength that IDFC First Bank has is that it offers a wide range of financial and consulting services to its customers ranging from investment banking, asset management, private banking and insurance, which give it an edge over other competitors banks.
• Talent Management: IDFC First Bank has a highly skilled workforce. This is due to their excellent training and learning programs. Human resources are an integral part of the success of IDFC First Bank in the consumer financial services industry.
• Strong Brand Recognition: IDFC First Bank’s products and services are highly recognized in the consumer financial services industry for the last 10+ years. This allowed the company to charge a premium compared to its competitors in the consumer financial services industry.
• Government Support: In 2014, the Reserve Bank of India added the bank to its list of commercial banks, reducing the cost of short-term funding and improving the ability of banks to serve, further enhancing the bank’s growth prospects.
• Limited Competitive Overlap: IDFC First Bank has little geographical overlap with other small financial banks, limiting competition among existing players.

• Brand Ambassador: On 11 March 2020, the bank announced that it has signed Mr Amitabh Bachchan, as its first brand ambassador and bank tie-ups with the popular Indian television show KBC, helping IDFC First Bank to attract more customers to its bank and boost-up bank recognition.

Weaknesses of IDFC First Bank

The weaknesses are the negative points on which the brand must improve upon. For IDFC First Bank, the following are its weaknesses:

• Declining Market Share: This is due to the consumer financial services industry growing at a faster rate than the company. In such a scenario, IDFC First Bank needs to carefully analyse various trends within the financial sector to understand what to do to drive future growth.
• High Cost to Replace Existing Professionals: Few employees are responsible for the knowledge base of IDFC First Bank, and their replacement will take up a lot of time and money for the company.
• Rising Interest Risk: As the company is primarily wholesale-funded, rising interest rates can negatively impact borrowing costs and thus profitability.
• Easily Imitable Business Model: The Business Model of ICBC can be easily imitated by the competitors in the industry name industry. To overcome these challenges company name needs to build a platform model that can integrate suppliers, vendors, and end-users.
• Need to Invest More in New Technologies: According to the country’s scale of expansion and the geographical areas IDFC First Bank needs to invest more funds in technology to coordinate the processes across the board. Currently, the investment in technology is not on par with the vision of the company.

Opportunities for IDFC First Bank

Opportunities are external elements that are in favour of the company and the firm can use it to its advantage to grow. The opportunities of IDFC First Bank are given below

• Advancements in Technology in the Banking Sector: The banking industry has always functioned based on technology. IDFC First Bank is known for its best-in-class user-friendly digital banking offerings. Thus, IDFC First Bank should continue to adopt the latest technological advances. To draw future generations, they should focus on putting out newer banking and financial service using digital marketing skills.

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• Growth Potential: IDFC First Bank operates in under-penetrated sectors such as vehicle finance, MSME and small enterprise finances which offers it strong growth potential.
• Product Growth Potential: The bank is yet to launch several other major lending banking products and hence has greater growth potential. 
• Expanding the Customer Base in Upper Segments: As customers must move from unorganised operators in the banking sector to licensed players, IDFC First Bank has the opportunity to enter the entry-level market.
• Global Opportunities for IDFC First Bank: A major opportunity for financial service players in the Indian market is the global banking market, it is inarguably that the global market is worth billions of dollars. IDFC First Bank is mainly focused on the Indian market, which needs to increase its reach outside the Indian market as well making it gain more customers.
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Threats to IDFC First Bank

Threats are external elements that could be detrimental to the growth of the company. Threats can be managed but not controlled. The threats of IDFC First Bank are

• Shortage of Skilled Human Resources: Given the high turnover rate of employees and the increasing reliance on innovative solutions, IDFC First Bank may face challenges in this sector soon.
• Dynamic Competition: New technologies developed by competitors and the market can pose a serious threat to the industry in the medium to long term. The competition is expected to intensify, especially in the area of liabilities, as the target profile of customers of new banks is similar to that of the existing banks.
• Retention of Key Management Personnel: Developing and retaining key executives can be difficult as multiple new banks, fintech companies, and existing banks are competing for the same talent pool.
• Increased Marketing Efforts: Due to the rise of digital marketing, there is an increasing number of promotional messages which are being sent by competitors. It clutters up the space, which leads to losing out on customers. IDFC First Bank is well versed and trying to adopt a variety of the latest digital marketing skills to get ahead of the competition. You must also check out these skills to achieve the same.

This ends our detailed SWOT analysis on IDFC First Bank. Let’s conclude our findings below.