“Global Generative AI in BFSI Market to reach a market value of USD 8.7 Billion by 2031 growing at a CAGR of 32.7%”
The Global Generative AI in BFSI Market size is expected to reach $8.7 billion by 2031, rising at a market growth of 32.7% CAGR during the forecast period.
Countries like the UK, Germany, and France led the charge, with financial entities leveraging generative AI to streamline operations and offer personalized services. The European Union's initiatives to promote AI research and development further bolstered the market's growth, ensuring that Europe remained a key player in the global generative AI BFSI landscape. Thus, the Europe segment garnered 30% revenue share in the market in 2023. The region's focus on digital transformation and stringent regulatory standards prompted financial institutions to adopt AI-driven solutions for compliance, risk management, and customer service enhancement.
The adoption of generative AI facilitates improved operational agility. Financial institutions that harness AI can more quickly adapt their products and services, responding to regulatory changes, economic fluctuations, or customer feedback. This flexibility keeps them compliant and strengthens their position as market leaders by demonstrating responsiveness to client needs. Thus, such instances are increasing the demand for generative AI in BFSI sector. Additionally, reducing manual compliance efforts significantly decreases operational costs and reallocates employee time to higher-value tasks, such as strategic planning and risk management. Additionally, generative AI models can identify potential compliance issues early, alerting institutions to potential risks before they escalate. This proactive approach safeguards against regulatory penalties and builds greater trust with clients and stakeholders by ensuring that the institution operates transparently and within legal boundaries. Hence, AI’s role in regulatory compliance and reporting transforms the BFSI sector, propelling the market's growth.
However, the complexity of generative AI necessitates a robust data infrastructure to effectively manage, process, and store the immense quantities of data necessary for the training of these models. Financial institutions often must invest in sophisticated data management solutions and ensure data security, further driving up costs. There may also be additional expenses related to model validation and testing, which are necessary to ensure the AI operates correctly, ethically, and in compliance with regulatory standards. Given that generative AI solutions are relatively new, the cost of customization, troubleshooting, and support can also be higher, adding to the financial burden. Thus, these cumulative costs can be prohibitive, forcing them to weigh the benefits of generative AI against more traditional, cost-effective solutions, thereby slowing market expansion.
The leading players in the market are competing with diverse innovative offerings to remain competitive in the market. The above illustration shows the percentage of revenue shared by some of the leading companies in the market. The leading players of the market are adopting various strategies in order to cater demand coming from the different industries. The key developmental strategies in the market are Acquisitions, and Partnerships & Collaborations.
On the basis of application, the market is divided into fraud detection, risk assessment, customer experience, algorithmic trading, and others. The algorithmic trading segment recorded 14% revenue share in the market in 2023. In the algorithmic trading segment, generative AI is crucial in automating trading strategies and analyzing vast amounts of market data to make split-second trading decisions. AI-driven algorithms can identify profitable trading patterns, predict market movements, and optimize asset allocations, allowing financial institutions to maximize returns.
Based on end-user, the market is classified into banks, insurance companies, and financial service providers. The insurance companies segment procured 34% revenue share in the market in 2023. Insurance firms use AI to analyze vast amounts of data, enabling them to accurately predict policyholder behaviors, assess risk profiles, and personalize offerings. AI-driven automation in claims processing accelerates the settlement process, enhancing customer experience and operational efficiency. Additionally, generative AI helps detect fraudulent activities early by analyzing patterns, making it a valuable tool in risk management.
Free Valuable Insights: Global Generative AI in BFSI Market size to reach USD 8.7 Billion by 2031
Region-wise, the market is analyzed across North America, Europe, Asia Pacific, and LAMEA. The North America segment witnessed 39% revenue share in market in 2023. North America led with the highest revenue share, driven by substantial investments in AI technologies and a robust technological infrastructure. The presence of major financial institutions and tech companies in the U.S. and Canada facilitated the integration of generative AI solutions, enhancing customer experiences and operational efficiencies.
| Report Attribute | Details |
|---|---|
| Market size value in 2023 | USD 945.8 Million |
| Market size forecast in 2031 | USD 8.7 Billion |
| Base Year | 2023 |
| Historical Period | 2020 to 2022 |
| Forecast Period | 2024 to 2031 |
| Revenue Growth Rate | CAGR of 32.7% from 2024 to 2031 |
| Number of Pages | 198 |
| Number of Tables | 280 |
| Report coverage | Market Trends, Revenue Estimation and Forecast, Segmentation Analysis, Regional and Country Breakdown, Market Share Analysis, Porter’s 5 Forces Analysis, Company Profiling, Companies Strategic Developments, SWOT Analysis, Winning Imperatives |
| Segments covered | End-User, Application, Region |
| Country scope |
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| Companies Included | Accenture PLC, SAS Institute Inc., Google LLC, Salesforce, Inc., Microsoft Corporation, Adobe, Inc., OpenAI, LLC, IBM Corporation, NVIDIA Corporation, Intel Corporation |
By End-User
By Application
By Geography
This Market size is expected to reach $8.7 billion by 2031.
Growing Use in Regulatory Compliance and Reporting are driving the Market in coming years, however, Data Privacy and Security Concerns restraints the growth of the Market.
Accenture PLC, SAS Institute Inc., Google LLC, Salesforce, Inc., Microsoft Corporation, Adobe, Inc., OpenAI, LLC, IBM Corporation, NVIDIA Corporation, Intel Corporation
The expected CAGR of this Market is 32.7% from 2024 to 2031.
The Banks segment is leading the Market by End-User in 2023; thereby, achieving a market value of $3.6 billion by 2031.
The North America region dominated the Market by Region in 2023; thereby, achieving a market value of $3.3 billion by 2031.
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