Blockchain in Banking and Financial Services Market - Forecast(2022 - 2027)

Blockchain in BFSI Market Overview

Blockchain in Banking and Financial Services Market size in 2020 is estimated at $1,218million and is projected to reach $ 13,946million in 2026 growing at a CAGR of 51.4% during the forecast period 2021-2026. Blockchain technology is an open, distributed ledger that records transactions between two parties efficiently and permanently. Blockchain technology, in banking and financial services, has advantages such as improved efficiency, enhanced security, unchangeable records, and a quick transaction time. The demand for Blockchain technology is expected to rise owing to the increased need for transparency & accountability in financial transactions. Also, the increased adoption of cross-border payments, digital ledger, consortium blockchain and increased investment by banks in blockchain-based solutions are further contributing to their use. Blockchain in banking and finance sector helps to minimize fraud by eliminating the need of third-parties. This also has added benefit of faster clearing and settlement of transactions. Blockchain in financial services also ensure security in the databases and transactions by providing transparency and reducing fraud.

Report Coverage

The report: “Blockchain in BFSI Market Report– Forecast (2021-2026)”, by IndustryARC covers an in-depth analysis of the following segments of the Brushless DC Motor market
By Type:  Public Blockchain, Private Blockchain, Hybrid Blockchain, Consortium Blockchain
By Application: Fund Transaction Management, KYC/Identity Management, Liquidity Management, Real Time Loan Funding, Real Time Asset Tracking
By Geography: North America (U.S, Canada, Mexico), Europe (Germany, UK, France, Italy, Spain, Russia and Others), APAC (China, Japan India, Australia and Others), South Africa (Brazil, Argentina, Chile Columbia and Others) and RoW (Middle East and Africa)


Key Takeaways

  • The global Blockchain in Banking and Financial Services Market is consolidated with key players accounting for about 90% of the market revenue. The top players include Microsoft, IBM, Infosys, Amazon Web Services and Hewlett Packard Enterprise Development LP.
  • The key players are adopting strategies such as product launches, acquisitions, and partnerships, with other players and companies as well to strengthen their presence in the market. 
  • The high costs of private blockchain are challenging the market. Private Blockchain are more expensive than other blockchain as it is valid for only one entity.

Global Blockchain in BFSI Market, By Application, 2026

Global Blockchain in BFSI Market

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Blockchain in BFSI Market Segment Analysis - By Type

Blockchain in Banking and Financial Services Market size in 2020 is estimated at $1,218m and is projected to reach $ 13,946m in 2026 growing at a CAGR of 51.4% during the forecast period 2021-2026. By Type, Private Blockchain segment is forecast to be the fastest-growing segment and is projected to grow at a CAGR of 57.5% during the forecast period 2021-2026. This is owing to its advantages in banking and financial applications such as high security and reduction of fraud. And, the public blockchain segment is the dominant one generating revenue of $544.5m in 2020. This is mainly owing to increased use of public blockchain as it provides decentralization and becomes a great advantage for situations where a network needs to be decentralized and enables full transparency of the ledger. 

Blockchain in BFSI Market Segment Analysis - By Technology

By Application, Fund transaction management segment accounted for largest share in the Blockchain in Banking and Financial Services Market and generated a revenue of $516.4m in 2020 and is projected to grow at a CAGR of 50.4% during the forecast period 2021-2026. The demand for blockchain in banking and financial services for fund transaction is increasing as it is more programmable and easier to manage. The Real time loan funding segment is forecast to be the fastest-growing segment and is projected to grow at a CAGR of 56.7% during the forecast period 2021-2026. This is majorly attributed to its faster and more secure loan processes. Further, it provides significant convenience and speed of fund. 

Blockchain in BFSI Market Segment Analysis - By Geography 

North America is the major region dominating the Blockchain in Banking and Financial Services Market with revenue of $ 489.4m in 2020 and is forecast to grow at a CAGR of 53.8% during the forecast period of 2021-2026 to generate a revenue of $ 6,206m by 2026. This is mainly owing to presence of major market players and on-going developments in blockchain technology in this region. The Blockchain technology in banking and finance provides cryptographic security and transparency which decreases the fraud in banks is set to rise the growth of the market in this region. Asia Pacific region is projected to be the fastest growing region with a CAGR of 56.1% during the forecast period 2021-2026. This is owing to increasing demand of blockchain technology for better and transparent transaction in banking and financial sector. 

Blockchain in BFSI Market Drivers 

Increasing Adoption Of Blockchain in Banking And Rising Use Of Cryptocurrency

The financial services industry is increasing the adoption of blockchain technology, making it secure and efficient. Blockchain allows settlements to become user-optimised, and save time and money. It also reduces the need for staff at banks, as transactions settle instantly. These advantages have driven the use of blockchain as a service(Baas). The retail-banking and institutional investors are expressing more interest in cryptocurrencies and blockchain in the recent times. For instance, JPMorgan Chase introduced JPM Coin, its own Cryptocurrency, in 2019. Cryptocurrencies are gaining increased usage in countries like U.K., Nigeria, Australia, Canada, Mexico and India. Use of blockchain in banks help reduce infrastructure cost. Smart blockchain contracts also help lower financial expenditures, minimize maintenance and other costs. Another advantage is that there will not be any intermediaries in the bank-to-bank transactions, thus ensuring quick and secure payments. Blockchain 3.0, the third development phase of blockchain, attempts to fix the current challenges faced. It will focus on improving interoperability, scalability, and privacy. Thus the development of Blockchain 3.0 also further drive the market. 

Reduction in Fraud through Blockchain

As it operates on a distributed ledger system with decentralized network. Thus blockchain in banking and financial services reduces chances of fraud, and this drives the market. Also, the decentralized nature of the transactions ensures better security in bank records. Bank details and transactions are also recorded quickly and securely. The global finance industry possesses various bank records such as personal account data to stock market transaction ledgers and are recorded using blockchain digital ledgers. This makes them unalterable and hence prevents fraud. Bank-to-bank financial transactions are prone to fraudulent attacks from bank cards and mobile payments. Blockchain also help banks verifying customer identity, thus preventing money laundering or even common frauds such as 'double spend'. It also helps in real-time tracking of remittances, thus reducing fraud. Moreover, various companies such as Cambridge Blockchain and R3, are focusing to develop blockchain technologies to help financial institutions establishing identity. 

Blockchain in BFSI Market Challenges

Limited Scalability

Traditional payment providers are having more transaction capacity than cryptocurrencies. While the Bitcoin can do just 4.6 transactions per second; VISA can do 1700 transactions per second. Blockchain in financial services are not scalable and the blockchain transactions are dependent on the network congestion. Which means that they do not have the capacity to increase transactions and consequently raise concerns in security as well. If the adoption of cryptocurrencies increase, they need to have the ability to handle large size of transactions without any delays and the growing number in future. The financial sector is prioritizing blockchain models that can offer security and scalability rather than decentralization. 

Blockchain in BFSI Market Landscape

Product launches, acquisitions, Partnerships and R&D activities are key strategies adopted by players in the Blockchain in BFSI market. The Blockchain in Banking and Financial Services Market is consolidated with key players accounting for about 90% of the market revenue in 2020. The top players include Amazon Web Services, Microsoft, IBM, Hewlett Packard Enterprise Development LP and others.

Acquisitions/Product Launches

  • In December 2019, Infosys partnership with R3 company to bring blockchain solutions to the Financial market. This partnership enabled banks to easily access and increase Finacle’s blockchain solutions.
  • In December 2019, Bitfury launched Exonum enterprise blockchain that helps to make institutions more trusted and in turn improving the lives of people and can also handle upto 5,000 transactions per second.

Relevant Report Titles:

Report Code: ITR 0108

Report Code: ITR 0109


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