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The Private and Public Cloud in Financial Services Market size is estimated to grow at a CAGR of 19% between 2023 and 2028. The market size is forecast to increase by USD 106.43 billion. The growth of the market depends on several factors, including growing demand for virtually unlimited storage and big data, increased focus on cost optimization and scaling computation and high focus on sustainability using green IT.
The report includes a comprehensive outlook on the Private and Public Cloud in Financial Services Market offering forecasts for the industry segmented by Service Type, which comprises SaaS, IaaS, PaaS. Additionally, it categorizes Deployment into (public cloud and private cloud and covers Geography regions, including North America, APAC, Europe, Middle East and Africa, and South America. The report provides market size, historical data spanning from 2018 to 2022, and future projections, all presented in terms of value in USD billion for each of the mentioned segments.
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Private cloud: Private cloud refers to cloud infrastructure and services that are exclusively owned, operated, and used by a single organization, such as a bank, insurance company, or investment firm. These private clouds are usually deployed within the organization's own data centres or hosted by a trusted third-party vendor. Public Cloud: Public cloud refers to cloud services that are provided and managed by third-party cloud service providers, such as Amazon Web Services (AWS), Microsoft Azure, or Google Cloud Platform. These cloud services are usually offered on a pay-as-you-go basis and are available to multiple organizations in a shared infrastructure.
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 Cost management pressures are also increasing as a result of stringent regulations on banking and outdated technology systems.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 private and public cloud 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 the growth of the global private and public cloud market in the financial services industry 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 private and public cloud 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 private and public cloud market in the financial services industry during the forecast period.
In 2023, the public cloud segment dominated the private and public cloud in the financial services market, primarily due to the increasing globalization and the growth of the IT and BFSI sectors. The demand for public cloud services in the financial services industry is rising due to an increase in the number of SMEs in developing economies such as China, India, Brazil, Indonesia, and Mexico, which demand solutions for business-related insights. However, leading companies in the private and public cloud in financial services market are investing in the development of advanced IT security features to make cloud computing services highly secure. Such factors are expected to drive the adoption of the public cloud segment, which in turn will drive the growth of the private and public cloud 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 Private and Public Cloud Market in the Financial Services Industry report includes the adoption lifecycle of the market, 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 growth strategies.
Global Private and Public Cloud Market in the Financial Services Industry 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.
Akamai Technologies Inc. - The company offers private and public clouds such as Alibaba Cloud that enhance business agility and accelerate digital transformation with business solutions for financial services.
Alibaba Group Holding Ltd. - The company offers private and public clouds such as Google Cloud which is suitable for banking, capital markets, insurance, and payment services.
Alphabet Inc. - The company offers private and public clouds such as AWS Cloud which is suitable for banking, payments, capital markets, and insurance services.
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 private and public cloud market in the financial services industry report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018-2028
Private And Public Cloud Market In The Financial Services Industry 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 growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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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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