The Banking, Financial Services, and Insurance (BFSI) sector in Telangana is undergoing rapid transformation due to technological advancements, regulatory changes, and increasing demand for financial inclusion. This study examines the current skill landscape in the BFSI sector, highlighting the gap between the industry’s evolving needs and the workforce’s existing competencies. Through a comprehensive analysis of the skill requirements— ranging from traditional banking skills to advanced digital proficiencies like fintech, data analytics, and cybersecurity the study identifies critical areas where the talent pool is falling short. The study explores the impact of digitalization on the sector, noting a significant shift in demand toward tech-driven roles. It also investigates the current state of education and training in Telangana, revealing that traditional academic programs do not fully align with the practical skills needed by BFSI employers. Moreover, the resistance to adopting new technologies and the lack of industry relevant training programs contribute to this growing skill gap. In response, the study suggests actionable solutions, including the integration of BFSI-specific courses in higher education, collaborations between industry and academia, and government initiatives focused on skill development. These measures aim to enhance the employability of Telangana’s workforce, ensuring that it can meet the dynamic needs of the BFSI sector. Ultimately, the study provides insights that can guide policymakers, educational institutions, and industry leaders in bridging the skill gap, thereby fostering a more competitive and capable workforce in Telangana’s BFSI industry.