HDFC is banking and financial solutions company incorporated in India and is one of the leading banking networks in India with their branches all over India. Conducting a PESTEL analysis on HDFC Bank, we will identify how these six external forces act on HDFC Bank and affect its business in different areas.
Political Factors
The government policies have an immense effect on the banking sector. For instance, in India, mostly the government is unstable with its policies and if the government changes the benefits of agricultural loans just to their advantage, favoring the farmers and getting their votes, it can affect the business of banks and thus HDFC Bank can face loss due to that. Similarly if they formulate any new labor or loan laws, it can affect the business of HDFC. Currently, the demonetization issue also resulted in losses for banks as well as HDFC. HDFC reported lowest ever quarterly profit growth (DNA, 2017).
Economic Factors
Political and economic factors are somehow connected as government also formulates the economic policies and it can have an effect on business and functioning of HDFC Bank. For instance, if the fiscal or monetary policies are changed, it can affect HDFC in a positive or a negative way. Similarly, if the growth rate of India is increasing with people having more incomes, then the banks can also have an advantage from that as their revenues will also increase.
Socio-cultural Factors
Throughout India, HDFC Bank have its branches, even in the very remote places. But factors like education level, acceptance of such business and perception of people belonging to different areas affect HDFC’s revenues in different regions. For instance, if people from a remote area of India do not accept or are unable to trust the banks with their money, then HDFC will have less business in that remote are as compared to a bigger city where people rely on banks a lot. So the lifestyles and perception of people in different are can result in increase or decrease in revenue for HDFC Bank.
Technological Factors
Banks are all about technology and HDFC strives continuously to deliver the customers with the convenience incorporating latest technological trends. Credit and debit cards are producing cash-less society and bringing convenience and security to people. Using technology in all their services, including online banking, ATM, bank transfers, SMS banking, HDFC is gaining more customer base and is eventually gaining more profits and growing their business with time.
Environmental Factors
By incorporating technology, HDFC is consuming less paper through mobile and online banking. This tells how they are contributing towards the environment with their technology. Everything related to banking can now be done online, saving the time for customers as well as saving the environment as well. These services have gained HDFC Bank a good brand name amongst the people who have now become aware and responsible towards our worsened environment situation.
Legal Factors
Banking industry has to follow very crucial laws and regulations and HDFC Bank has been following them since it has started its business in India. Complying with these rules and legal requirement is essential for the survival and growth of their business. It also saves them from any law suits in the future. If HDFC continues to do that, they sure will keep on growing on the same pace as they are growing today.
References
Pti. (2017, January 24). Demonetization hits HDFC Bank, posts lowest-ever profit growth | Latest News & Updates at Daily News & Analysis. Retrieved October 12, 2017, from http://www.dnaindia.com/money/report-demonetization-hits-hdfc-bank-posts-lowest-ever-profit-growth-2295779
HDFC Bank LTD Ads (HDB). Retrieved October 12, 2017, from http://www.wikinvest.com/stock/HDFC_Bank_LTD_Ads_(HDB)/Political_Instability_Changes_Government_India_Delay_Liberalization_Indian
Securing a cashless society. (2016, November 29). Retrieved October 12, 2017, from http://www.thehindu.com/opinion/op-ed/Securing-a-cashless-society/article16723302.ece