Digital Twin in Finance Market

[163 Pages Report] The digital twin in finance market size is projected to grow from USD 0.1 billion in 2023 to USD 0.5 billion by 2028, at a CAGR of 34.8% during the forecast period. The primary factor driving the growth of digital twin in finance market is the growing need to meet compliance requirements in financial institutions. Digital twin platforms help financial institutions in meeting their regulatory requirements, engaging with customers, and optimizing business operations.

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Digital Twin in Finance Market Dynamics

Driver:  Growing adoption of industry 4.0

In the banking sector, Industry 4.0 technologies have unlocked new dimensions. With Industry 4.0, new banking services and opportunities can be launched to improve business performance and end customer experiences. In the finance sector, digital twins can be used to simulate financial scenarios and analyze the impact of different market conditions on financial performance. For example, a digital twin of a portfolio on investments can be used to test different investment strategies and assess the potential risks and rewards.

Restraint: High cost of digital twin deployment

The high investments required for the deployment of digital twin solutions act as a restraint for the growth of the market. The high installation costs of information and enabling technology systems are due to the requirement for consultation, acquisition, and implementation of these systems and services. The implementation of digital twins requires the adoption of advanced smart sensors, IoT, IIoT devices, and several software solutions. The communication between these technologies can be done with the help of more advanced and latest functions such as voice recognition, gesture recognition, or multitouch responsive screens. These technologies are still quite expensive and may lead to an additional financial burden on companies operating in price-sensitive economies.

Opportunity: Growing demand for open banking

The increasing use of open banking systems globally provides opportunities for innovation and implementation of digital twin technologies. Open banking provides open access to third-party financial service providers for consumer banking, transactions, and other financial data from banks and non-bank financial institutions. To add more security layers and minimize risks related to open banking, the need for digital twins has increased in this sector. Digital twins ensure the elimination of unauthorized access such as fake cards or any other object that can be duplicated. Using a virtual environment will also help to develop quick incident response plans.

Challenge:  Growing threat of cyberattacks

The implementation of digital technologies, such as the cloud, big data, IoT, and artificial intelligence, has increased in various industries and businesses. Digital twins integrate various IoT sensors and other digital technologies in order to create a virtual copy of the physical twin. However, increasing occurrences of viruses and cyberattacks have raised concerns regarding data security. Digital twins gather sensitive data related to banking customers. With the growing number of cyberattacks on critical infrastructure over the past decade, cybersecurity has become a major concern among financial institutions. Thus, the increasing threat pertaining to data security is expected to be a major challenge for the growth of the digital twin in finance market.

Digital Twin in Finance Market Ecosystem

Prominent companies in this market include well-established, financially stable provider of digital twin solutions and services. These companies have been operating in the market for several years and possess a diversified product portfolio, state-of-the-art technologies, and strong global sales and marketing networks. Prominent companies in this market include IBM (US), Microsoft (US), Capgemini (France), SAP (Germany), and Ansys (US).

By BFSI, the insurance segment to hold the largest market size during the forecast period

With the advent of new technologies such as AI, IoT, and ML, modern insurance companies are seeking to adopt new technological solutions to visualize and conceptualize the data obtained from physical assets and apply digital twin tools to analyze more favorable outcomes. Digital twins can benefit insurers by estimating the risk involved in specific situations before giving insurance policies to customers. These solutions also help insurance companies calculate dynamic premiums based on risk factors. Insurance companies are adopting digital twin technologies at a rapid pace so as to enhance their abilities to assess and manage risks

Based on  offering segment, the platforms & solutions segment to hold the largest market size during the forecast period

The rising adoption of Industry 4.0 technologies and the need for digital transformation in several industries have increased the demand for digital twin platforms in various verticals. With the integration of IoT, artificial intelligence, and other advanced technologies, companies can create virtual replicas of their physical assets and processes, providing insights into the performance and behavior of these assets. In the finance sector, digital twin platforms & solutions are becoming increasingly important as financial institutions seek to leverage digital technologies to improve efficiency, reduce costs, and provide better services to customers.

Based on end-use industries segment, the healthcare segment is expected to grow with the highest CAGR during the forecast period

The use of digital twins in the healthcare industry will reduce the complexities and costs associated with handling and operating medical devices, such as MRI and X-ray instruments as well as CT scanners. Digital twins have the capability to simulate and enhance clinical workflows, which includes the movement of patients in and out of hospitals or outpatient clinics. This technology can pinpoint areas of congestion and inefficiency in the process, allowing healthcare institutions to minimize waiting times and enhance patient contentment, while simultaneously reducing expenses.

Based on region North America is expected to hold the largest market size during the forecast period.

North America, being an early adopter of digital twin solutions, is a major revenue-generating region in the global digital twin in finance market. Increasing adoption of cloud-based solutions in financial institutions is responsible for the growing demand for digital twins in the finance market in this region. The increasing number of internet subscribers, expanding mobile data traffic, and growing government emphasis on the enhancement of digital infrastructures to meet the demand for seamless connectivity are expected drive growth in the overall digital twin in finance market.

Market Players:

The major players in the digital twin in finance market are IBM (US), Microsoft (US), Capgemini (France), SAP (Germany), Ansys (US), Altair (US), NVIDIA (US), NTT Data (Japan), Oracle (US), Deloitte (UK), Verisk (US), Cosmo Tech (France), NayaOne (UK), VSOptima (US), Merlynn (US), Piprate (Ireland), and TADA (US). These players have adopted various growth strategies, such as partnerships, agreements and collaborations, new product launches and product enhancements, and acquisitions to expand their footprint in the digital twin in finance market.

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Scope of the Report

This research report categorizes the digital twin in finance market to forecast revenues and analyze trends in each of the following submarkets:

Based on Offering:

• Platforms & Solutions
• Services
  • Professional Services
  • Managed Services

Based on Application:

• Risk Assessment & Compliance
• Process Optimization
• Insurance Claims Management
• Testing & Simulation
• Other Applications

Based on End-Use Industry:

• BFSI
  • Banking
  • Financial Services
  • Insurance
• Manufacturing
• Transportation & Logistics
• Healthcare
• Other End-Use Industries

By Region:

• North America
  • United States (US)
  • Canada
• Europe
  • United Kingdom (UK)
  • Germany
  • Rest of Europe
• Asia Pacific
  • China
  • Singapore
  • Rest of Asia Pacific
• Rest of the World

Recent Developments

• In April 2023, IBM and Cosmo Tech announced their integration. The Cosmo Tech platform connects to asset information from the IBM Maximo Application Suite. Through this integration, asset managers can simulate the complete physical and financial life cycle of their asset network, even under conditions that have never occurred before.
• In  July 2022, Microsoft and Cosmo Tech collaborated to merge their digital twin platforms to deliver practical insights for organizations to achieve net-zero carbon emissions. This partnership brings together Microsoft Azure Digital Twins and the 360° Simulation Digital Twin platform from Cosmo Tech. By integrating these platforms, the enterprise customers of Microsoft Azure can track emissions from their systems almost instantly and model future outcomes of various sustainability initiatives.
• In September 2022, Altair announced the completion of the acquisition of RapidMiner.
• In September 2022, NVIDIA and Deloitte announced an expansion of their cooperation to make it easier for businesses all over the world to develop, integrate, and deploy hybrid-cloud solutions.
• In February 2022, Ansys upgraded the ANSYS Twin Builder 2022 R1. By merging physical and virtual sensors, ANSYS Twin Builder 2022 R1 provides predictive analytics with unrivaled accuracy. New features enable faster deployment of users’ digital twins, easier workflows, and web applications for online interaction with the user model.

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