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The Private and Public Cloud in Financial Services Market size is forecast to increase by USD 106.43 billion, at a CAGR of 19% between 2023 and 2028. The financial services sector has witnessed substantial growth, propelled by several pivotal factors. Firstly, there is a rising demand for extensive data storage and processing capabilities, driving market expansion. Secondly, financial institutions are prioritizing cost efficiency and scalability, prompting widespread adoption of cloud solutions. Lastly, sustainability has become a critical focus, leading to increased adoption of green IT practices within cloud infrastructure. These elements collectively underscore the robust growth of the cloud market in financial services. As firms seek to enhance operational efficiency and meet stringent regulatory requirements, cloud technology offers scalable solutions that not only optimize costs but also align with environmental sustainability goals. This strategic integration of advanced technology and sustainable practices positions the industry to innovate and meet evolving market demands effectively.
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The financial technology industry is undergoing rapid transformation, leveraging cloud computing solutions to revolutionize the way financial service institutions operate. Both private and public cloud solutions, including Infrastructure as a Service, Platform as a Service, and Software as a Service, offer scalable computing resources and powerful tools for control and service customization. As hybrid cloud adoption gains momentum, advancements in artificial intelligence, machine learning, and edge computing are reshaping the landscape of financial services. Major public cloud service providers offer virtual computers to tenants, empowering them with robust application development tools and enabling seamless integration with digital transformation strategies. With increasing internet penetration, the financial industry is embracing cloud-based solutions to enhance efficiency, security, and agility, driving innovation and enabling broader access to financial services.
Increased focus on cost optimization and scaling computation is notably driving the market growth. The decrease in revenue for financial services firms is leading to the allocation of smaller budgets for IT infrastructure. Cost management pressures are also increasing as a result of stringent regulations on banking and outdated technology systems. Therefore, financial services firms are adopting cloud services to reduce IT infrastructure costs and achieve business agility. For many organizations, new financial regulations, such as the General Data Protection Regulation, not only impact their revenue inflow but also give rise to the need for additional resources to maintain regulatory compliance.
Additionally, cloud computing reduces large capital expenses that are required for building data centres and servers. It also improves cost efficiency by allowing the pay-for-use model. In addition, it provides virtually unlimited space for big data storage. Such benefits are expected to propel the growth of the market in the financial services industry during the forecast period.
The emergence of blockchain technology is an emerging trend shaping the market growth. Blockchain technology is gaining popularity in the financial services sector. It is replacing the current centralized business model of financial services. Currently, a central ledger such as the Federal Reserve and its members acts as the custodian of a financial firm's information. In blockchain technology, the information of each transaction is transparently registered digitally in a shared database in the cloud. This eliminates the need for middlemen or a central acting body. This feature of blockchain technology, i.e., the decentralization of the central authority, is the main factor driving its adoption. Blockchain technology is not only helpful for banking and financial services but is also essential for online and offline banking transactions in sectors such as e-commerce, IT, and retail.
However, nowadays, most financial firms are conducting proof of concept. Some financial firms, such as Goldman Sachs and Overstock.com have already adopted this technology for specific applications. Thus, the emergence of blockchain technology will drive market growth and trends during the forecast period.
Network connectivity issues and latency a significant challenges hindering the market growth. A hybrid cloud setup requires a wide area network (WAN) connection between the on-premises data center/private cloud and the public cloud. This can give rise to potential network connectivity or latency issues. Network failure can impact the business operations of financial services firms significantly. There are multiple connectivity options to connect between the public and private clouds. These include an ordinary internet connection, a virtual private network (VPN) connection, or a direct connection. Each of these connectivity options has its own advantages and limitations. Data transferred over the Internet is not secure, as it can be tracked and stolen or replaced with malicious data.
However, a dedicated connection can be extremely costly. Therefore, when choosing a network connection, a customer may have to choose between performance, price, and security, which can restrict the private and public cloud in financial services market growth. Such factors are expected to hinder the growth of the market in the financial services industry during the forecast period.
The market share growth by the SaaS segment will be significant during the forecast period. SaaS solutions are on-demand software solutions that are delivered over the Internet through a subscription model. Organizations are implementing cloud-based SaaS solutions to reduce the high upfront costs of software licensing.
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The SaaS segment was the largest and was valued at USD 23.73 billion in 2018. The use of public SaaS is increasing, owing to its features such as elasticity and scalability, which are critical in organizations that provide IT-enabled services. Public SaaS offers a wide scope for data recovery. It offers software programs with the necessary functionalities, so the user simply needs to log in and access the software. Various organizations are launching SaaS solutions. For instance, in May 2021, Kwipped launched a software-as-a-service solution, "APPROVE" to promote equipment financing at every point in the sales process through a digital quoting engine. Therefore, the wide adoption of SaaS technology by businesses and consumers will further drive the demand for SaaS solutions, which in turn will drive the growth of the market in the financial services industry during the forecast period.
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APAC is estimated to contribute 39% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The adoption of cloud computing in North America is comparatively lower among SMEs than large enterprises. Smaller financial services firms have adopted cloud services to support digital financial services. The banking, financial services, insurance, e-commerce, and telecommunication sectors are the major adopters of cloud computing services. Cost reduction is a primary factor in the adoption of cloud computing services. Also, the global Internet services and infrastructure market is at a crossroads, with the private and public cloud in financial services market having a positive impact due to factors such as planned expansions by hyper scalers and increasing adoption of cloud computing and colocation services.
In addition, the adoption of public cloud is very low among large banks because of the perceived security and regulatory risks in the region. This scenario is changing because of the need to cut down infrastructure costs and increase flexibility, security, and compliance services by cloud companies. The adoption of the public cloud by big banks is expected to increase significantly by 2022, and IaaS will gain popularity. Such factors are expected to drive the regional market growth during the forecast period.
The market research report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and forecasting strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.
Private cloud solutions and hybrid cloud solutions offer operational efficiency and robust data security, incorporating advanced security measures such as identity management and compliance automation to ensure strong encryption and regulatory compliance. Leveraging cloud-native technologies and cloud-native applications built on microservices architecture and containerization, organizations optimize their IT strategies and address regulatory problems effectively. With the proliferation of Internet of Things (IoT) devices and the rise of remote working, digital banking transformation relies on cloud computing software for analytical support and enhanced cybersecurity against cyber attacks. Data protection measures and cloud expertise are critical in mitigating security issues and facilitating disaster recovery. Offering on-demand data storage and flexible delivery models, cloud solutions drive customer acquisition and enable organizations to adapt to evolving security challenges in an increasingly digital landscape.
Market Scope |
|
Report Coverage |
Details |
Page number |
188 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 19% |
Market Growth 2024-2028 |
USD 106.43 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
17.27 |
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
Performing market contribution |
APAC at 39% |
Key countries |
US, Canada, China, UK, and Germany |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Akamai Technologies Inc., Alibaba Group Holding Ltd., Alphabet Inc., Amazon.com Inc., Cisco Systems Inc., Citrix Systems Inc., Dell Technologies Inc., Equinix Inc., Hewlett Packard Enterprise Co., International Business Machines Corp., Juniper Networks Inc., Microsoft Corp., NetApp Inc., Oracle Corp., Rackspace Technology Inc., Salesforce Inc., SAP SE, SS and C Technologies Holdings Inc., Temenos AG, and VMware Inc. |
Market dynamics |
Parent market analysis, Market forecasting growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Service Type
7 Market Segmentation by Deployment
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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