Blockchain In Retail Banking Market Size, Share & Trends Analysis Report By Type (Public, Private, Hybrid), By Component, By Enterprise Size, By Application, By Region, And Segment Forecasts, 2022 - 2030

Report Overview

The global blockchain in retail banking market size was valued at USD 0.64 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 83.9% from 2022 to 2030. The ability of blockchain to eliminate intermediaries and enhance trust and data handling capabilities for retail banks is driving the industry's growth. Many retail banks are developing digital business models and offering data-based services to their millions of customers. Retail banks are experimenting with blockchain technology to leverage the cost-cutting and transparency provided by the technology, which is expected to drive the adoption of blockchain in retail banking over the forecast period.

With continued digitalization and growing internet users worldwide, cross-border cash flows are increasing rapidly. However, traditional cross-border remittances face challenges such as prolonged standing queues, higher service charges, and limited resources. Additionally, the emergence of numerous fintech companies is increasing the competition in the traditional remittance ecosystem. Blockchain can remove these inefficiencies, which is expected to drive its adoption for remittances. Moreover, incumbents are developing their software & solutions for addressing these challenges. For instance, the Society for Worldwide Interbank Financial Telecommunications (SWIFT) partnered with banks through its global payments innovation project to enhance the cross-border payment experience.

The global financial system has witnessed some significant changes over the past few years, both fundamentally and technologically. However, as the global financial systems grow, financial institutions and retail banks are seeking to simplify their multi-system approach. The concept of distributed ledger and blockchain can help streamline all the data among various banking platforms, via sharing the information internally and with other banks. Additionally, blockchain networks are hard to tamper with, so the transactions registered on the blockchain cannot be amended, making it a much safer option for retail banks. Retail banks are adopting blockchain to establish accountability and reduce disputes among network participants, thereby propelling the market’s growth.

The rising competition, IT revolution, emergence of fintech industries, and evolving customer expectations have pushed banks to adopt new strategies and techniques. Retail banks are adopting advanced technologies, such as blockchain. This technology helps banks in providing a better customer experience, lowering operating costs, and minimize the costs of banking transactions. Due to the design properties of blockchain, which offer a decentralized, distributed, and public ledger to record many transactions across networks, retail banks are increasingly adopting blockchain technology, which is driving the industry’s growth.

However, blockchain technology is yet to evolve in terms of regulatory compliance. For instance, the legal framework regarding the legal nature of blockchains and shared distributed ledgers includes territoriality issues, and in terms of jurisdiction and applicable laws, since any specific location does not bind blockchain. Due to this, the responsibility for any malpractices can become an issue. However, many fintech companies are investing heavily in blockchain technology, and governments are taking strategic initiatives to regularize the blockchain infrastructure, which is expected to reduce the regulatory concerns of the blockchain in the retail banking market.

COVID-19 Impact Analysis

The COVID-19 spread is anticipated to play a decisive role in driving the market's growth. The global payment industry is transforming with the rapid growth in the usage of digital payment methods by consumers. The payment industry transformation, coupled with the globalization of the digital economy, is increasing consumer expectations. Following this, banks need to offer clients an enriched customer experience, which creates an opportunity to implement advanced technologies such as blockchain. In light of it, retail banks are adopting blockchain software to secure customers' data, such as debit/credit numbers, date of birth, and other information, to enhance their customer experience and reduce the possibility of cyber-attacks during the pandemic breakout.

Type Insights

In 2021, the public segment dominated the blockchain in retail banking market and accounted for a revenue share of more than 60.0%. Public blockchains are primarily used for mining and cryptocurrency exchange. A public blockchain is decentralized, allowing anyone to run nodes and view the data held by the blockchain, which brings transparency and openness to the blockchain, its most significant strength. Public blockchain allows participants free access, empowers them by eliminating regulatory borders, and allows them to explore possible applications, which is expected to contribute to the segment’s growth over the forecast period.

The hybrid segment is expected to witness significant growth over the forecast period. The hybrid blockchain is an amalgamation of both public and private blockchains. In a sense, hybrid blockchain provides the best of both entities by utilizing the ideal parts of both private and public blockchains. The ability of the hybrid blockchain segment to keep the transactions private, yet verify them when entailed by enabling access through smart contracts, is increasing their adoption in retail banking. The vital need for banks to keep their data private, yet to verify it, is expected to drive the adoption of the hybrid-type blockchain segment in the retail banking market.

Component Insights

The infrastructure & protocols segment dominated with a revenue share of more than 63.0% in 2021. The blockchain protocols include Hyperledger, Ethereum, Corda, and Quorum, among others. These protocols provide an umbrella of standards, guidelines, and frameworks to build blockchain-based applications. The retail banking sector is constantly under the radar and needs to meet the pressures of utmost security and regularizations. The blockchain infrastructure & protocols segment ensures the data's safety, driving the segment’s growth.

The application & solution segment is expected to register the fastest growth over the forecast period. Applications and solutions of blockchain include asset management, KYC, and fraud detection solutions over the private blockchain. These applications help retail banks streamline their functioning, efficiently manage their clientele, eliminate intermediaries, and provide trust and data-handling capabilities. Additionally, these applications and solutions validate and record transactions without requiring third-party authorization, thereby driving the segment’s growth.

Enterprise Size Insights

The large enterprises segment accounted for the largest revenue share of more than 68.0%. Large enterprises deal with a large volume of employee and customer data. Blockchain technology offers large enterprises the ability to pool large volumes of data and anonymize & protect it using the ledger’s encryption protocols. Retail banks can view the data uploaded by other banks on the blockchain and gain insightful information for their further business processes. These benefits provided by blockchain technology are driving the growth of the large enterprises segment.

The small & medium enterprises (SME) segment is projected to register the fastest growth over the forecast period. Typically, SMEs lack appropriate capital and funding. For instance, as per a study conducted by the U.S.-based BAKER INSTITUTE, 64% use savings as startup capital. Hence, SMEs are constantly searching for opportunities for a capital influx. With the increasing option of fintech companies, venture capitalists, and investors coming forward to invest in blockchain, SMEs are seizing the opportunity of getting the capital influx by introducing blockchain in their operations. Besides streamlining their business processes, improving security, and customer satisfaction, blockchain is expected to provide a capital influx opportunity for small & medium retail banks, which is expected to drive the segment's growth.

Application Insights

In 2021, the remittances segment accounted for the largest revenue share of more than 44.0%. The emergence of several fintech in cross-border remittances leads to more efficiency in parts of the value chain. This emergence includes using application programming interfaces (APIs) that seamlessly integrate into current treasury infrastructure, offer real-time visibility into foreign currency exchange (FX) rates, and enable financial organizations to manage risks effectively. Along with these advanced technologies, retail banks are adopting blockchain to offer real-time and low-cost remittance services, expected to drive the segment’s growth.

The KYC & fraud prevention segment is expected to register significant growth over the forecast period. One of the critical issues faced by retail banks is identity verification and fraud. Banks lose over USD 15 billion to USD 20 billion annually from identity fraud and are under intense pressure to protect customers’ data. Blockchain is a powerful resource in combating these issues. Using blockchain, processes such as account opening and onboarding can be streamlined and verified from the beginning. Blockchain allows retail banks to lighten their information verification burden by automating the process, increasing the adoption of blockchain in retail banking in KYC and fraud prevention, propelling the segment’s growth.

Regional Insights

North America dominated the market in 2021 and accounted for a revenue share of more than 32.0%. This domination is attributable to the aggressive implementation and use of blockchain technology by major financial institutions such as JP Morgan Chase and Morgan Stanley. Smart contracts, digital identity detection solutions, remittance services, and payment & wallet solutions deployed by financial institutions and retail banks are creating deployment opportunities for blockchain in retail banking in North America. Furthermore, the presence of major industry players like International Business Machines Corporation and Microsoft Corporation, among others, is expected to drive the regional market’s growth.

Asia Pacific is expected to register the fastest growth over the forecast period. Banking institutions are adopting blockchain technology to cater to the enormous consumer market in the region with high efficiency. Additionally, governments of countries such as China, India, and Japan, are promoting the use of blockchain technology. Moreover, the region's young, tech-curious population is boosting the regional market, as 60% of the global youth is concentrated in the region. Thus, the market is anticipated to register the fastest growth by catering to a huge, efficient youth population with retail banking services in the region.

Key Companies & Market Share Insight

Blockchain in retail banking industry is concentrated with a few prominent players. Prominent players are focusing on expanding their customer base by adopting new technologies and business strategies. For instance, in 2019, with the help of IBM, Scentre Group, and a group of Australian financial services firms, launched a pilot project to put retail lease bank guarantees on a private blockchain. Such initiatives are expected to drive the adoption of blockchain in retail banking.

Moreover, international banking has generated several business opportunities to extend its services to a higher global reach. For instance, in 2022, PayBito, a US-based exchange, extended its reach to Japan by offering flagship crypto-banking solutions to prominent Japanese financial organizations. Hence, this market provides crypto-venturing institutions an opportunity to develop services globally, which is expected to further propel the industry’s growth. Some prominent players in the global blockchain in the retail banking market include:

• Unicsoft

• Accenture plc

• Cognizant technology solutions corp.

• International Business Machines Corporation (IBM)

• Microsoft Corporation

• Digital Asset Holdings, LLC

• Tata Consultancy Services (TCS)

• Axoni (SCHVEY, INC.)

• Ping An Insurance (Group) Company of China, Ltd.

• Santander Bank, N. A.

Blockchain in Retail Banking Market Report Scope

Global Blockchain in Retail Banking Market Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global blockchain in retail banking market report based on type, component, enterprise size, application, and region:

• Type Outlook (Revenue, USD Million, 2017 - 2030)

  • Public

  • Private

  • Hybrid

• Component Outlook (Revenue, USD Million, 2017 - 2030)

  • Application & Solution

  • Infrastructure & Protocols

  • Middleware

• Enterprise Size Outlook (Revenue, USD Million, 2017 - 2030)

  • Large Enterprises

  • Small & Medium Enterprises

• Application Outlook (Revenue, USD Million, 2017 - 2030)

  • Remittances

  • KYC & Fraud Prevention

  • Risk Assessment

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • U.K.

    • Italy

    • France

    • Spain

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa