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The global internet of things (IoT) in banking, financial services, and insurance (BFSI) market size stood at USD 17.85 billion in 2018 and is projected to reach USD 116.27 billion by 2026, exhibiting a CAGR of 26.5% during the forecast period.
The IoT in BFSI refers to a network of connected smart devices, including smartphones, wearable, home assistants, and toll payment devices, among others. These smart devices help to provide enhanced payment-experience and banking services to end-users. These smart devices are backed up with advanced sensors which are connected to the internet infrastructure. The internet infrastructure assists these devices to send and receive information among each other through a single platform. Also, IoT solutions are contained with a set of hardware and software components that help to transmit and receive valuable information between banks and users. It is used to track and analyze the demand and behavior of the customers to provide real-time analytics services including financial credits, loans and among others.
In the banking sector, the provider of financial services uses IoT solutions to offer on-demand and easy-access-services to end-users. IoT technology assists banking organizations in analyzing the usage of ATM kiosks in specific zones. This technology ensures making quick decisions regarding the increase/decrease installation of ATMs, depending on usage volume. Also, Non-bank financial institutions (NBFC) uses IoT solutions to reduce operational and management cost and also improve services.
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The insurance companies use IoT technology to obtain facts and information about the product design and layout defects, to access the best premium and price coverage in case of any product causality. With the help of IoT solutions, insurance organizations offer enhanced customer experience services, operational efficiencies, and risk management facilities to the end-users. In the U.K., several insurance companies, including Just Miles, Oseven, Hubio, and Autoemo, are partnering with startups to develop Usage-Based Insurance (UBI), solution based on ‘Telematics’ (vehicle sensors). The UBI solution is used to capture and analyze user’s data and behavior patterns. This is likely to support insurance organizations to develop insights for customer personal habits and behaviors and further effectively assess the insured risk and offer added value services.
Concerns related to the operability and lack of skilled professionals to deliver services is likely to be a key restraint for the growth of this market. Moreover, one of the emerging IoT in BFSI market trends related to this is the rising adoption of upcoming 5G cellular technology and cloud applications in IoT. Several organizations including Infosys Limited and Capgemini Financial Services, are developing IoT solutions based on the cloud. For instance, in April 2019, companies including Capgemini Financial Services and Amazon Web Services (AWS) developed IoT service based on cloud platforms for financial and security services. Rising demand of IoT in banking, financial services, and insurance market is playing a vital role for the growth of the market.
“Advancements in Online Banking Applications to Aid Expansion of the Market”
Rising usage of online banking applications is expected to be one of the key factors driving the growth of the IoT in BFSI market during the forecast period. One of the key benefits of online banking applications is that it helps to reduce the intermediates and provides easy-to-access services to end-users. Several features of online banking applications include e-wallets service, virtual assistants, self-assisted services and highly authenticated security systems to secure funds from cyber-attacks. In the present scenario, key players in the market in this market are focused on entering into strategic partnerships and acquisitions to develop banking applications for end-users. For instance, in May 2018, Hero Electronix acquired Zenatix to develop banking applications for BFSI, automotive and retail industry. The rising demand for banking suite applications is driving the need for IoT solutions in the BFSI industry. These banking applications are based on IoT software that helps to collect facts, information and usage capability of users with the help of surveys and feedback and further analyze customer’s behaviors and make enhanced decisions. With the rising usage of online banking applications, demand for internet of things in BFSI Market is expected to grow with a exceptional CAGR.
“Implementation of Cloud of Things is Driving the Demand for IoT Solutions in BFSI”
Rising deployment of cloud of things platform in IoT devices is projected to be one of the crucial factors fueling the demand for Internet of Things (IoT) in banking, financial services, and insurance (BFSI). Some of the significant advantages of cloud of things are that it helps to analyze and predict frauds and risk related to debit and credit card transactions. The detailed information pertaining to debit, credit cards, and transactions is stored in a cloud platform. With the help of IoT technology-based on cloud services, banks and financial organizations will assuredly approve or decline the transaction accordingly. In the existing scenario, companies are focused on several initiatives for investments and collaboration to offer cloud services to banking organizations. For instance, in July 2019, Deutsche Telekom completed a partnership with Software AG to develop and offer cloud of things platform and expand their presence across the U.S, Germany and other European countries.
“Rising Popularity of Usage-Based Insurance (UBI) Solutions in Insurance Sector will Aid Market Growth”
Based on the component, the scope of the study is classified into solutions and services. Among all the components, solutions are anticipated to grow at a decent percent in the upcoming years, as it is cost-effective and flexibly deployed across a wide range of applications. To cater to the rising demand from banking and financial sector, key players in this market are focused on developing UBI (Usage Based Insurance) solutions based on telematics.
With the development of telematics, autonomous cars are equipped with IoT sensors that help to collect valuable information and transmit behavior data of driver to the car insurance companies. The information collected, further helps to assess drivers' risks and possibilities accordingly. Key companies such as Microsoft Corporation are focused on investing and acquiring other players to enhance their product offerings. For instance, in April 2019, Microsoft Corporation acquired Express Logic, Inc. to expand its product offerings and boost IoT development, including Azure IoT Edge, Azure Digital Twins, Azure Sphere, Azure Maps and Azure IoT Central.
IoT security solutions, including Attila’s “GoSilent”, is developed to identify and mitigate online cyber-attacks. GoSilent helps to secure all the network endpoints, including servers, mobile devices, printer, scanners, laptops, desktops, and other peripheral devices.
“Increasing Adoption of Real-Time Operating Systems (RTOS) Applications aid to Increase Adoption of Internet of Things in BFSI”
Based on the application, the study covers customer experience management, security, monitoring, data management and others (payment etc.). Customer experience management is likely to dominate the market by capturing maximum revenue share during the forecast period. The customer experience management is gaining a lot of popularity owing to its ease-of-deployment and operability.
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It helps customers to operate in real-time operating systems from their smart devices, including smartphones, desktops, and laptops, without the requirement of any intermediate or bank agents. The rising adoption of the real-time operating systems in BFSI applications is expected to augment the demand for the customer experience management segment.
Under the scope of the study, the regional segment is divided into five major regions including North America, Asia Pacific, Europe, Middle East & Africa, and Latin America. North America is expected to dominate the market by covering the maximum revenue share in the market during the forecast period. The growth in this region is owing to the presence of some of the major banks, including JPMorgan Chase, Bank of America, Citigroup Inc. among others, and rising adoption of core communication technologies in banking services. Key companies in this market which has presence in North America are planning to complete strategic mergers and partnership with local players in this region to increase their investment in BFSI business units. For instance, in June 2019, BB&T Corp merged with SunTrust Banks to offer a wide range of financial services, including wealth management, retail, and commercial banking services, investments, insurance, among others. The rising expansion of product portfolio of major companies would help to drive the growth of internet of things (IoT) in banking, financial services, and insurance market.
Asia Pacific is anticipated to grow with the highest CAGR during the forecast period. Key countries, including Japan, India and Singapore are focused on adopting IoT technology in their smart cities and smart buildings projects. For instance, in Singapore, in 2018, the Information Technology Standards Committee (ITSC) and Infocomm Development Authority of Singapore (IDA), initiated a project as “Spring Singapore”. This project helps to encourage market leaders to implement new developments and investments in IoT solutions. Further, the growth rate in countries such as korea and India is expected to rise during the forecast period. The growth is owing to rising investments by the government and banking investors across the region.
Asia Pacific IoT in BFSI Market Size, 2018 (USD Billion)
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According to primary sources, during 2017-2021, Asia is expected to dominate the IoT revolution by investing around USD 500 billion for the development of various applications including artificial intelligence, augmented reality and blockchain. With the help of this IoT model, organizations can provide connected financials solutions to their end-users.
In Europe, the market growth is significantly driven by an increasing number of banking and financial institutions in countries, such as Germany, the U.K., France, and others. Also, to cater the rising demand for IoT solutions from banking organizations, key players are focused to develop and launched advanced devices based on IoT platform to ease the operations. For Instance, in 2018, in Europe, Barclays plc. developed and launched personalized wearable device “pay with Bpay.” This wearable device allows contactless payment transactions.
Moreover, market growth in MEA and Latin America is expected to grow with a steady CAGR. This continuing growth is owing to less initiatives and investments done by government and financial institutes. According to preliminary research, in 2018, in MEA, around USD 8 billion is projected to spend on the development of IoT technologies in countries including Saudi Arabia, South Africa, UAE, among others. These factors are expected to rise the demand for internet of things in banking, financial services, and insurance market.
“Key Players including the IBM Corporation, Cisco Systems, Microsoft Corporation and Others are Focused to Develop Market Centric IoT Solutions for BFSI”
IBM Corporation is considered as one of the major players capturing the maximum market share in terms of revenue, in 2018. IBM Corporation is presently focused on the development of solutions offerings of IoT for BFSI.
IBM is functioning on the development of its cognitive computing ‘Watson IoT technology’. The company’s Watson IoT technology provides advanced solutions and services in the BFSI industry including nextgen banking, core banking digital transformation, customer experience and risk, compliance and security. IBM’s IoT solution for BFSI helps to improve business models by providing analytic and cognitive capabilities. The key objective of the IBM Corporation is to amalgamate Watson technology with IoT technology to enhance procedure models, asset productivity and operational efficiency by applying real-time responsiveness. Currently, IBM Corporation merging with Bank of America is aiming to develop ready public cloud, financial services for clients.
Other key players including Cisco system, Microsoft Corporation and Oracle Corporation are also focusing on investment for the development of market-centric IoT in BFSI industry.
An Infographic Representation of Internet of Things (IoT) in BFSI Market
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The report presents a comprehensive assessment of the global internet of things in banking, financial services, and insurance (BFSI) market by offering valuable insights, facts, industry-related information, and historical data. Several methodologies and approaches are adopted to make meaningful assumptions and views. Furthermore, the report offers a detailed analysis and information as per market segments, helping our readers to get a comprehensive overview of the global market.
Value (USD billion)
Fortune Business Insights says that the Internet of Things (IoT) in BFSI market was valued at USD 17.85 billion in 2018.
In 2026, the Internet of Things (IoT) in BFSI is expected to reach a value of USD 116.27 billion.
Steady growth of 26.5% CAGR is being observed in the Internet of Things (IoT) in BFSI in the forecast period (2019-2026)
Asia Pacific is anticipated to be the dominant region for the global Internet of Things (IoT) in BFSI market and is valued at USD 3.35 billion in 2018. This growth is owing to rising investments done by the government and banking investors for smart cities projects.
Within the applications, customer experience management is expected to be the leading segment in the Internet of Things (IoT) in BFSI market during the forecast period.
Rising adoption of online banking applications and increasing implementation of cloud of things in banking software has given a drive to the adoption of IoT solutions in BFSI
Cisco Systems, Microsoft Corporation, Oracle Corporation, and IBM Corporation are the top players in Internet of Things in BFSI market, as they offer wide range of IoT solutions for BFSI that help to enhance the market growth.
The major players in the Internet of Things in BFSI market hold approximately 50-55% of the market owing to their strong product portfolio, robust brand image
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