The SNS Insider report highlights the Tokenization market‘s promising trajectory, indicating a valuation of USD 2.84 billion in 2023 and a projected market size of USD 11.11 billion by 2031 and CAGR of 18.26% during the forecast period 2024-2031.
Growing Demand for Secure Data Storage Fuels Market Growth
The tokenization market is experiencing robust growth due to the escalating need for secure data storage solutions. With the growing dependence on digital transactions and the ever-present threat of data breaches, organizations are increasingly seeking ways to safeguard sensitive information. Tokenization offers a compelling solution by replacing sensitive data with non-sensitive tokens, effectively masking the original data and rendering it useless to hackers even in the event of a breach. This enhanced security is fueling the adoption of tokenization solutions across various industries.
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Major The Key Players of Tokenization Market
MasterCard, Inc., CardConnect, Micro Focus International plc, Visa, Inc., TokenEx, American Express Company, Fiserv, Inc., Thales Group, HelpSystems, Lookout, FIS, Futurex, and others
Segmentation Dominance
Cloud-based tokenization solutions are gaining significant traction due to their numerous advantages. Compared to traditional on-premises solutions, cloud-based tokenization is more affordable, easier to integrate, and offers a higher level of security by storing sensitive data outside an organization’s internal systems. This segment is anticipated to register the highest CAGR (26.58%) during the forecast period, reflecting the growing preference for cloud-based solutions.
The Banking, Financial Services, and Insurance (BFSI) sector is expected to hold the largest market share throughout the forecast period. This dominance stems from the BFSI sector’s inherent vulnerability to cyberattacks due to its involvement with financial transactions. Recognizing the critical need for advanced payment security, BFSI institutions are actively adopting tokenization solutions to safeguard their operations and customer data.
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Key Market Segments
By Component
- Solution
- Services
By Deployment
- Cloud
- On-premises
By Application Area
- Payment Security
- User Authentication
- Compliance Management
- Others
By Services
- Professional Services
- Managed Services
By Technology
- Application Programming Interface-based
- Gateway-based
By Industry Vertical
- BFSI
- Healthcare
- IT
- Government
- Retail And E-Commerce
- Energy & Utilities
- Other
Impact of Geopolitical Tensions and Economic Slowdown
The Russia-Ukraine conflict and potential economic slowdowns pose potential challenges to the tokenization market. Governments may enact stricter regulations on tokenization and cryptocurrency trading during times of crisis, potentially impacting market accessibility. Geopolitical uncertainties can also lead to increased cybersecurity risks, with hacking attempts targeting cryptocurrency exchanges and tokenization platforms becoming more prevalent. Additionally, economic slowdowns can dampen overall market sentiment and investment behavior, potentially hindering the growth of the tokenization market.
Key Regional Developments and Future Growth
North America currently holds the dominant market share, driven by the rapid adoption of new technologies in the region, particularly in countries like the US, Canada, and Mexico. The extensive use of online payment methods and the presence of global payment network providers like Visa and Mastercard further contribute to the regional market’s growth. Looking ahead, Asia Pacific is expected to witness the fastest growth rate due to factors such as rising smartphone penetration, widespread internet usage, and the increasing adoption of advanced payment security technologies.
Recent Developments
- In January 2024:The tokenization market continues to evolve with exciting developments. the Bank for International Settlements (BIS) Innovation Hub launched a tokenization project focused on advancing research on central bank digital currencies (CBDCs) and payment privacy.
- In December 2023:Akemona, Inc., a leading asset tokenization platform, announced agreements with new issuers in December 2023, facilitating global equity token offerings on its platform. These developments highlight the continuous innovation and expansion within the tokenization market.
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Key Takeaways
- Cloud-based tokenization offers a robust security solution for organizations by replacing sensitive data with non-sensitive tokens, minimizing the risk of data breaches.
- The BFSI sector’s dependence on secure financial transactions makes it the leading adopter of tokenization solutions, driving market growth.
- Cloud-based tokenization solutions are gaining significant traction due to their affordability, ease of integration, and superior security features.
- The tokenization market offers promising growth opportunities across various industries, particularly in regions like Asia Pacific with a high rate of technology adoption.
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