Banks and financial institutions are gradually shifting their core applications over to the cloud network, to offer a personalized banking experience, mitigate the risks associated with conventional technologies, improve the operational control of platforms, reduce capital expenditure, and meet the growing need for real-time analysis of high-volume data. However, the deployment of the cloud infrastructure escalates the risk of cyberattacks, as the data is stored at remote locations. To combat the cyber threat, such institutions are increasingly adopting a range of advanced security solutions.
The financial service sector has become a prime target for cybercriminals, as it centers around financial assets and generates massive unstructured data. Moreover, progressive steps such as the adoption of online banking and shift toward digital processes have increased the probability of data breaches, thereby resulting in huge losses. Hence, the rising incidence of data breaches will help the BFSI security market advance at a high CAGR of 16.9% during 2020–2030. According to P&S Intelligence, the market was valued at $31.3 billion in 2019, and it will reach $175.1 billion by 2030.
The security of banking and financial operations is increasingly relying on the internet of things (IoT) technology, as it helps in identifying the kind of devices that can be vulnerable and remotely controlling surveillance devices for the early detection of fraudulent activities. Owing to these advantages, it has become imperative for the BFSI sector to deploy smart security solutions that provide centralized management, detect potential cyber threats, assess risk proactively, and automate work operations. Thus, it encourages IT firms to introduce intelligent security solutions for financial institutions and banks.
The increasing deployment of new-age technologies like cloud and IoT has escalated the need for information security solutions such as antivirus, unified threat management systems, data loss prevention solutions, identity and access management systems, and data encryption methods. In recent years, BFSI institutions have increased their focus on data encryption methods due to a spike in the volume of electronic payments, which has augmented fraudulent activities in the payment area. The incidence of unauthorized transactions, false requests for bounced cheques or refunds, and stolen or lost merchandise have become quite regular in financial institutions.
Geographically, North America makes the widest use of BFSI security solutions, wherein the U.S. is their larger user. Furthermore, the U.S. is also expected to generate the higher demand for a robust BFSI security infrastructure in the foreseeable future owing to the high need for vulnerability management solutions, heavy investments in the installation of cyberattack mitigation solutions, and upgradation of the information and physical security infrastructure. According to the Internet Crime Complaint Center (IC3) of the Federal Bureau of Investigation (FBI), the U.S. registered 351,936 complaints regarding internet-based frauds and thefts in 2018.
In the coming years, Asia-Pacific (APAC) is expected to adopt BFSI security solutions at the fastest pace, on account of the increasing investments in the IT sector, especially in China and India, surging fraudulent activities, and rising penetration of improved technologies in banks and financial institutions. As a result, players operating in the Chinese BFSI security market are already providing access control systems, intruder alarm systems, and various physical security information management (PSIM) systems to expand their business from video surveillance systems to a broader portfolio.
With the increasing vulnerability of the high volumes of data and financial assets of the BFSI sector to cyberattacks, the requirement for security solutions is expected to augment in the coming years.
Source: P&S Intelligence
