Cloud computing revenue in the Asia Pacific region will be significantly bolstered by fintech (financial technology) innovation, according to GlobalData.
According to the analysts, enterprises in the banking, financial services and insurance (BFSI) sector are increasingly adopting cloud-based solutions to minimise risk, maximise output and offer innovative service delivery methodologies to customers.
As a result, the cloud computing market in Asia-Pacific is estimated to grow at a compound annual growth rate (CAGR) of 7.7% to reach US$191.8bn in 2024.
GlobalData technology analyst Anshuma Singh says, “As enterprises in the financial sector continue to embrace digitalisation, they are increasingly emphasising on leveraging and integrating advanced technologies and business models to disrupt financial services offering capabilities across the region.
An analysis of GlobalData's Market Opportunity Forecasts Model reveals that cloud revenue in the BFSI sector will grow at a CAGR of 8.2% during 2019-2024 to reach US$27.8 billion in 2024.
Of the region, Indonesia, South Korea, Japan, Singapore, Australia and New Zealand will witness the highest CAGRs during the forecast period.
China and India are home to the early adopters of fintech in the region. Strong growth in the fintech investment by the emerging countries including China, Japan, Australia, South Korea and India will boost the revenue contribution of the BFSI sector in the Asia-Pacific cloud computing market, the analysts state.
Singh says, “The growing popularity of digital payment solutions including in-store mobile payment platforms, eWallets and peer-to-peer payment systems among end users has a significant impact on the development of the fintech ecosystem in the Asia-pacific region.
Another key finding is that banks are continuing to foray partnerships with fintech to gain from the digital disruption.
For instance, major Chinese banks including China Construction Bank, Industrial and Commercial Bank of China, Bank of China partnered with Alibaba's fintech arm Ant Financial and Tencent Holdings for services such as e-payments, deposit-like funds, and big data-assisted consumer lending services.
However, GlobalData finds that government regulations related to fintech in the APAC region are restricting its growth. Additionally, personal data protection regulations need to be adhered by the financial service providers.
For instance, under the banking act in Singapore a financial body is restricted from revealing its customer personal data without customer consent.
Therefore, several financial firms are reluctant to migrate to the cloud or partnering with the third-party players (TPPs) due to data security reasons.
Singh concludes, “The financial sector enterprises continue to embrace cloud services to reduce costs and manage large volumes of data with enriched security and accessibility features.
"The integration of cloud computing into banking solutions is anticipated to play a crucial role in transforming the banking sector in the forthcoming years.