Increasing Adoption of Blockchain In Banking And Rising Use of Cryptocurrency And Reduction In Fraud Through Blockchain is Driving the Growth of Blockchain In Banking And Financial Services Market

Increase In Need for Transactions Transparency and Accountability and Rise of Cryptocurrency is anticipated to boost Connectors for Factory Automation market during the forecast period 2021-2026. The Blockchain in Banking and Financial Services Market was valued at $1,218million in 2020 and is estimated to generate $3,923million in revenue by the end of 2023 and $13,946million by 2026. 

The market is estimated to grow at a CAGR of 51.4% from 2021 to 2026. Blockchain in Banking and Financial Services Market is driven by increased need for transparency & accountability of transactions, increased adoption of cross-border payments, digital ledger, and increased investment by banks in blockchain-based solutions. The market players are adopting strategies such as product launches, acquisitions, and partnerships to enhance their hold on the market. Key players in the Blockchain in Banking and Financial Services Market are Microsoft, IBM, Amazon web services, Infosys and Hewlett Packard Enterprise among others. The market is consolidated with few players holding the majority of market share. 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 banking and financial services industry uses intangible assets and are making use of IoT(Internet of Things) technology to reduce fraud, detect risks, and also ideal in offering better services to customers. Bank of Things enables billions of data transfers on a daily basis in effective manner. The increase in the number of IoT devices leads to rise in the number of transactions and exchanges, and increasing opportunities of blockchain in financial services. The BoT has the potential to transform banking and financial services in the future and can be further enhanced by the use of Blockchain technology. BoT functions such as mobile wallet, voice control money transfers or money lending on social networks are gaining popularity. Many banks are exploring the potential applications of the blockchain in their functions such as securing records of authenticated transactions. By integrating BoT in financial functions, banks will have to use existing research and data from connected devices to understand their customers' needs. For example, in 2016, the first global trade transaction between two independent banks Commonwealth Bank of Australia and Wells Fargo was carried out using blockchain, smart contracts and Internet of Things technologies. Banking institutions are adopting IoT technologies to enhance their user experiences such as customized messages on customer smartphones. Also, retail banking uses ATM machines which are early IoT devices as they allow real-time transactions, and increase efficiency. Use of live stream customer support on ATMs and other features offer opportunity for the market. Thus investment of retail banks in IoT infrastructure has provided opportunity for integration of blockchain technology.

The emergence of COVID-19 pandemic, had a noticeable impact on regional economic growth. It has created a highly volatile and unstable capital market worldwide. The banking and financial sector has been significantly affected by the pandemic. According to the International Monetary Fund, the global GDP is expected to decline by 3% in 2020. According to the World Trade Organization (WTO), global trade volumes are projected to decline between 13% and 32% in 2020 as a result of the economic impact of COVID-19. Also, there has been a decline in remittances over the past year, resulting in losses for the banking and financial sector. This in turn will affect the blockchain technology implementation for cross-boundary money transfers as well. The remittances globally are projected to decline in 2020, owing to the COVID-19 pandemic, according to the World Bank. The companies using blockchain-based international transfer services could be impacted by this. And, the implementation of blockchain by banks could help diminish the COVID-19 impact and use it to secure the data and applications on their network.

Increased competition in financial services industry has led to rise in virtual banks, creating an opportunity for the use of blockchain technology. Rapid development of IT infrastructure in banking and financial services is driving this transformation. Online or virtual banks plan to use blockchain technology to improve their operations. Use of blockchain allows round the clock transactions and this also increases the speed of transaction times that usually challenge banks. For instance, in April 2018, seven international banks united to support a blockchain platform for syndicated loans. The major banks were BNP Paribas, BNY Mellon, HSBC, ING, Natixis and State Street, supporting Fusion LenderComm. Also, digitization of banking allows decentralization, and use by anyone and also cryptocurrencies trade. It also provides opportunity for fast cross-border transactions in real-time without additional costs. The blockchain technology ensures secure data storage for records and transactions. Virtual banks may not have physical branches, and need to work other technology partner, increasing risk. This cyber security risk can be reduced with implementation of blockchain technology. With rise in the use of cryptocurrency and possibility of this replacing other currencies will increase the opportunities of blockchain technology as well. Also, cryptocurrencies have increased hedge fundraising. The key virtual banks include Ally Bank, Monaize, Simple Bank, Revolut, PaySera, and others.

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. Besides, there are other notable players in the market with similar product offerings. These companies offers their services to various banking and financial institutions and have a vast geographical presence, thereby augmenting their respective positions in the market.