BFSI Security Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

BFSI Security Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The BFSI security market is expected to register a CAGR of 12.43% over the forecast period. Banks and other financial institutes are under increasing scrutiny to ensure they have the appropriate security measures in place, especially in the wake of the numerous high-profile data breaches that have taken place over the last few years. Growth is anticipated due to escalating privacy issues brought on by data theft and illegal access for banking and insurance organizations.

Key Highlights

• BFSI security solutions help improve investment monitoring in financial institutions, including banks and insurance companies. Various organizations have started adopting such solutions to protect vital information stored on their systems and digital memory devices.
• Multiple factors, such as the emergence of customized solutions, biometrics, and cybersecurity solutions based on the internet of things (IoT), are expected to increase online banking opportunities in the market. However, high implementation costs and a lack of efficient security solutions hinder market growth.
• The increasing implementation of regulatory standards, coupled with the rise in the adoption of cloud-based security solutions and increasing modes of online payments, is expected to give rise to advanced security solutions. Also, because the adoption of cloud-based technologies has made data more vulnerable to security attacks, hackers have begun using malware, such as Odinaff, Danabot, Camubot, and Backswap, to target banks that rely on the SWIFT network to send money-moving messages. Market growth is anticipated to be further driven by rising demand for cloud-based security solutions that allow the banking, financial services, and insurance security (BFSI) sector to use their data effectively.
• Most BFSI security companies are third-party service providers, providing security solutions simultaneously to various clients and business verticals. Additionally, managing the data of several companies might cause management challenges for companies. Trust difficulties concerning security solutions and services, as well as the potential for third parties to become involved and cause the leakage of sensitive information, restrain the market growth.
• Due to the global increase in the use and consumption of online and digitalized financial services, the COVID-19 pandemic has substantially impacted the BFSI security market. Additionally, numerous countries have implemented lockdowns to stop the spread of the virus; as a result, BFSI security providers have gained pace during the pandemic crisis and are progressively offering software-as-a-services under security platforms. Consequently, amid the global health crisis, this has emerged as one of the key growth factors for the BFSI security industry.

Key Market TrendsRise in Cyber Data Breaches

• The BFSI sector is one of the critical infrastructure segments that suffers several data breaches and cyber-attacks, owing to the large customer base that the industry serves and the financial information that is at stake. Financial service institutions have been four times more susceptible to cyberattacks than other industries, which is expected to drive the demand for such solutions.
• Machine learning, artificial intelligence, and blockchain have all seen rapid adoption in several BFSI sectors, posing serious threats to data security. Due to the prevalence of cyberattacks and theft, the development in digitalization in this industry also necessitates data protection, which raises the demand for BFSI security. Additionally, as banks, other financial institutions, and enterprises switch to digitalized business operations, the adoption and use of security solutions have grown significantly. Cybersecurity is a service provided by the BFSI security industry and is anticipated to drive market expansion.
• Sears Holdings, the parent company of Kmart, revealed that Kmart’s store payment systems were infected with malware. JPMorgan was a victim of one of the biggest bank breaches in history, where hackers accessed the financial information of around 3,500 customers. With such instances, the companies are bound to increase cybersecurity, which drives the BFSI security market.
• The increasing number of banks, financial institutions, and other financing firms switching toward digitalized business operations and the need to adopt and implement security solutions and services have driven market growth.
• Growing economies provide considerable opportunities for BFSI safety to expand and broaden its offerings. Additionally, the rise in the option of the internet in the BFSI sector and the use of digitalized systems through the internet is anticipated to offer growth possibilities.The rising penetration of the internet in developing regions, which is stimulating the adoption of connected devices that enable convenient and secure financial transactions, is encouraging the banking, financial services, and insurance security market to implement threat management systems for securing payment gateways.

North America is Expected to Hold Major Share

• North America, particularly the United States, is one of the largest markets for BFSI security owing to the region's majorly depending on digital payments. The region is expected to witness healthy growth as well due to multiple government initiatives in the country demanding the need for better security solutions.
• The country's high dependence on online payments and recovering banking infrastructure urged banks to implement a strong threat management system to prevent financial data breaches. Increasing the need to protect information from hackers has propelled the adoption of BFSI security solutions in the region.
• USA has observed a significant adoption of cybersecurity platforms across BFSI companies. Many leading financial institutions in the country, such as Citi Bank, JP Morgan Chase, and the Bank of America, have implemented advanced cybersecurity systems to offer 24/7 protection against cybercriminals.
• Digitalization has encouraged financial institutions to implement threat management systems to protect their digital assets and customer data. Sensitive customer information includes credit or debit card details, bank account details, and payment information. According to the 2021 Year-ended Security500 report, the number of breaches reported in the United States increased 10%, growing to 2,932 in 2021 compared to 2,645 in 2020, which accounts for 12.5% of total data breaches. The amount of sensitive data in the banking industry is very high, making it a prime target for hackers, especially banks using SWIFT architecture.
• These factors have led to several security regulations, including the Federal Acquisition Supply Chain Security Act of 2018 and the Small Business Advanced Cybersecurity Enhancements Act of 2018 in the United States, to protect data from phishing and hacking.

Competitive Landscape

The BFSI security market is fragmented and consists of several major players. Many companies increase their market presence by introducing new products or entering into strategic mergers and acquisitions.

• October 2021 - Sophos was awarded Security Vendor of the Year in the European IT & Software Excellence Awards 2021. Sophos is working on the integration of AI into its products and services. Sophos Adaptive Cybersecurity Ecosystem (ACE) offers an open security architecture that optimizes threat prevention, detection, and response.
• June 2021 - McAfee announced a new partnership with Visa that enables Visa financial institution partners in North America and EMEA to offer award-winning internet security to Visa Business cardholders. Visa Business cardholders can get a subscription for McAfee solutions that protect sensitive data via email, provide web and firewall protection, offer mobile VPN, and safeguard devices from malware and other online threats.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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