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Blockchain in BFSI Industry Outlook - Forecast (2021-2026)

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  • 124 Pages
  • March 2021
  • Region: Global
  • IndustryARC
  • ID: 5566612
The Blockchain in BFSI Market size is forecast to reach $23 billion by 2026, growing at a CAGR of 74% from 2021 to 2026. The increased need for transparency & accountability of transactions through GRC Management Solutions, increased adoption of cross-border payments, digital ledger and consortium blockchain and increased investment by banks in blockchain-based solutions drive the growth of the global blockchain in the BFSI industry. In addition, increased demand from developing economies and increased demand for increased scalability, transaction speed, smart contracts and reduced processing costs are expected in the near future to create a number of opportunities in the Blockchain in BFSI Market.

Report Coverage

The report: “Blockchain in BFSI Industry Outlook - Forecast (2021-2026)” covers an in-depth analysis of the following segments of the Blockchain in BFSI Market.

By Type - Private Blockchain, Public Blockchain, Consortium Blockchain, Hybrid Blockchain, Others

By Application - Fund transaction management, Real time loan funding, Liquidity management, KYC/identity management, Real time asset tracking, Others

By Geography - North America (U.S, Canada, Mexico), South America(Brazil, Argentina and others), Europe(Germany, UK, France, Italy, Spain, Russia and Others), APAC(China, Japan India, SK, Aus and Others), and RoW (Middle east and Africa)

Key Takeaways

  • The Blockchain in BFSI Market in APAC is highly dominated due to presence of major market players and on-going developments in blockchain technology in this region.
  • Financial institutions are vulnerable to financial crimes regularly, which is one of the major factors that banks and financial institutions are shifting towards blockchain solutions, hence driving the mrket growth during the forecast period.
  • The main challenge for blockchain in BFSI is market is the limited awareness about blockchain in banking vertical, further hindering the growth of the Blockchain in BFSI Market

Type - Segment Analysis

By type, Blockchain in BFSI Market is segmented into private blockchain, public blockchain, consortium blockchain, hybrid blockchain and others. Among these, the public blockchain is anticipated to witness a significant growth rate during the forecast period 2021-2026 due to the numerous advantages provided by it. Every transaction is public and users can maintain individual anonymity. Moreover, public blockchain provides decentralisation and becomes a great advantage for situations where a network needs to be decentralized and enables full transparency of the ledger. This type of blockchain is faster, secure and less expensive than the accounting systems and methods used today in the finance industry, hence creating more opportunities for it during the forecast period 2021-2026.

End User - Segment Analysis

Among the verticals segment, the fund transfer management is expected to account for the largest market share during the forecast period. Blockchain enables the distributed ledger transactions in a blockchain network that maintains identical copies of transaction on multiple computer systems. And, any person that is involved in that network can review the transaction. Moreover, once the transaction is recorded it cannot be erased, however blockchain can be updated with the consent of majority of the participants. The traditional way of cross-border payments involves several issues such as high transaction costs, many intermediaries, and longer duration for completion. On the contrary, blockchain based process doesn’t involve any intermediaries, incurs less transaction cost, and allows quick transfer of money.

Geography - Segment Analysis

North America dominated the overall blockchain in BFSI market in 2018 and is expected to remain dominant during the forecast period due to presence of major market players and on-going developments in blockchain technology in this region. The presence of major market players and growing concerns for forgery in the region has propelled the adoption of blockchain. Simultaneously, the Asia-Pacific region would showcase the fastest CAGR of 79.3% during the estimated period. This is due to increase in collaborations, merger, and acquisitions activities among BFSI and IT organizations in this province.

Drivers - Blockchain in BFSI Market

  • Growth in Demand for Increased Scalability, Transaction Speed, and Reduction In Processing Costs

Blockchain technology in banking and finance sector is disrupting with its enhanced cryptographic security and transparency. It is estimated that 45% of financial institutions are vulnerable to financial crimes regularly, which is one of the major factors that banks and financial institutions are shifting towards blockchain solutions. Transactions performed through blockchain can eliminate third-party payment gateways resulting in fast-paced financial transactions. Thus, such factors are expected to provide major opportunities for the market growth in the upcoming years. Furthermore, blockchain is typically known for its enhanced security as it provides cryptographic security for its databases and transactions which is also the key factor that adds transparency and helps in fraud reduction hence, is expected to boost the market growth.

Challenges - Blockchain in BFSI Market

  • Limited Awareness about blockchain

One of the major hindrances in the growth of Blockchain in BFSI Market is the limited awareness about blockchain in banking vertical. Awareness about blockchain is very limited and shrouded by the disrepute of the unregulated cryptocurrency market. Businesses interested in blockchain could probably set aside an internal team focused to understand the technology, its impact, and areas of usage. Blockchain is considered as a complete technology that will replace existing technologies. This misunderstanding has also been a hindrance in its adoption.

Market Landscape

Product launches, acquisitions, and R&D activities are key strategies adopted by players in the Blockchain in BFSI Market. Blockchain in BFSI driver market is expected to be dominated by major companies such as Alphapoint, Auxesis Group, Amazon Web Services, Inc. (AWS), Bitfury Group Limited., Hewlett Packard Enterprise Development LP (HPE), International Business Machines Corporation (IBM), Infosys Limited, Microsoft Corporation, Oracle Corporation, and SAP SE. among others.

Acquisitions/Technology Launches/Partnerships
  • In 2017, BankChain, a platform for banks in India to explore, build, and implement blockchain solutions, has selected Microsoft Azure as their exclusive cloud partner. As a part of this partnership, the 20 BankChain members that include State Bank of India (SBI), ICICI Bank, DCB Bank, Kotak Bank, Bank of Baroda, Deutsche Bank, and others, will use Microsoft Azure Blockchain as the underlying blockchain platform.
  • In March 2021, Alphapoint has successfully raised $5.6 million in an additional funding round, taking its total capital raised to date to $23.9 million. The latest investment will go towards developing new trading features including improved margin trading and liquidity solutions and advanced brokerage capabilities.