The global hardware security module (HSM) market is forecast to grow at a CAGR of 12.0%, reaching USD 3.7 billion in 2031 from USD 2.1 billion in 2026.
A hardware security module (HSM) is an operational computing device that manages digital keys, encrypts and decrypts digital signatures, performs quick authentication, and performs other cryptographic operations. These modules often come in the form of an add-on card or external unit that plugs into the network or computer server. To maintain customer trust in the digital age, organisations essentially need hardware security components. They'll provide complete security that is unaffected by cyberattacks. Banking and financial organizations created a big demand for hardware security modules to safeguard the use of credit and debit cards from well-known brands like Mastercard and Visa in payment transactions.
Increasing need for cybersecurity
HSM use is rising across all industries as a result of an increase in data security theft incidents. HSM safeguards vital digital assets of an organization as well as digital transactions and user personal information. YubiHSM 2 is a cost-effective Hardware Security Module (HSM) for computers and IoT gateways that is intended to offer the highest levels of security for storage & management, generation of cryptographic digital keys, and support for a wide range of business settings and applications. Yubico is a leading provider of encoding hardware devices and authentication for the modern web. Over the course of the projection period, the market will benefit from this solid potential, increasing the Hardware Security Modules (HSM) market.
Rising use of mobile banking applications
the use of mobile banking applications is the surge in demand for personalization and self-service on goods and services. In addition, the expansion in the number of people using mobile applications to access banking services is fueled by technological developments in mobile banking, including the use of smart bots for personalized real-time customer assistance. Hardware security modules are becoming increasingly necessary as the use of mobile banking apps grows along with the potential of cybercrime. The creation of mobile banking apps necessitates adherence to stringent security procedures and guidelines.
Increasing cloud deployment
Cloud deployment is expected to hold the highest Hardware Security Modules (HSM) market share as industries may easily produce encryption keys on the cloud with cloud-based HSMs, eliminating the need to host and manage on-premises servers. The flexibility, scalability, and ease of system updates provided by cloud services are further advantages for businesses, allowing them to devote more time to their core business goals. For instance, Futurex LP revealed in January 2021 that in order to create payment applications using the company's business encryption and key management technology, a web API is used.
Complex integration process
It is challenging to integrate security modules for hardware with widely used tools and platforms. Although client integrations vary between security hardware module vendors, they typically fall short of providing all the features necessary in a corporate environment. Hardware security, including hardware encryption, is typically related to a specific device, making it less adaptable than its software equivalent because a single strategy cannot be used to defend the system as a whole and all of its components, is frequently connected to a specific device, making it less versatile than its software counterpart. A corporation must create a tailored integration if it uses tools that aren't already connected to its hardware security modules.
Rising use in banking and financial institutions
to the rising demand for e-wallet payment solutions, 3D secure payments, and digital banking services. In order to steal bank account and credit/debit information, tax information, user credentials, and insurance data, hackers have been concentrating their efforts on the BFSI sector for a long time. This has led to an increase in the use of hardware security modules in this industry. For business activities involving digital assets, LevelField partnered with Metaco in May 2022 as a technology service provider on the IBM Cloud. The orchestration and digital asset custodial platform of Metaco has been designed to store encrypted keys in an external database that is secured by IBM's level 4-rated hardware safety modules. This is made possible by IBM Cloud Hyper Protect Services.
North America is projected to have the highest share of the Hardware Security Modules (HSM) market
The North American region is anticipated to lead the Hardware Security Modules (HSM) market during the projected period. The application of hardware security modules and cyber-security IoT has been expanded in the North American region due to cyber-security regulations. A hardware security module is a tangible object that controls digital keys and makes sure they are generated and maintained securely. It shields these resources against unauthorized use and potential attackers on a physical and logical level. Large nations like the United States are progressively using hardware security modules because of their affordability and viability among small and medium-sized businesses in this region. The application of hardware security modules and security IoT has been broadened by regulations addressing cyber security issues in North America.
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| Report Metric | Details |
|---|---|
| Study Period | 2021 to 2031 |
| Historical Data | 2021 to 2024 |
| Base Year | 2025 |
| Forecast Period | 2026 – 2031 |
| Companies |
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By Type
LAN-Based HSM/Network-Attached HSM
PCI-Based/Embedded Plugins HSM
USB-Based/Portable HSM
By Deployment Type
Cloud
On-Premise
By Application
Retail Stores
Transportation
Corporate
Hospitality
Banking and Financial Institutions
Healthcare
Sports & Entertainment
Others
By Industry Vertical
Banking and Financial Services
Government
Type and Communications
Industrial and Manufacturing Industry
Energy and Utilities
Retail and Consumer Products
Others
By Geography
North America
United States
Canada
Mexico
South America
Brazil
Argentina
Others
Europe
United Kingdom
Germany
France
Spain
Others
Middle East and Africa
Saudi Arabia
UAE
Israel
Others
Asia Pacific
China
Japan
India
South Korea
Indonesia
Thailand
Others