Market Trends of South Korea Data Center Server Industry
BFSI to Hold Significant Growth
- In South Korea, with the rise of online banking and mobile payment systems, financial institutions are able to process transactions quickly and securely. Data centers provide the high-speed connectivity and processing power needed to ensure that transactions are processed in real-time, reducing the risk of errors or delays. Such factors lead to a major demand for servers for better computing.
- In 2022, there were around 207 million registered online banking customers in South Korea, showing an increase from the previous year. While the number of online banking customers was around 75 million in 2011, the number has more than doubled.
- The country's banking sector has always been known to embrace digital transformation. Recently, the sector has committed USD 492.7 million for digitization plans. South Korea has an advanced and profitable financial services sector, including Asia's third-largest insurance and banking markets.
- The government announced its plans to turn Seoul into a 'fintech test bed," which could further boost the demand for data centers and servers from the Banking, Financial Services, and Insurance (BFSI) segment. Korean banks are preparing for digitization by accelerating the closure of their branches nationwide. This move also aims to cut fixed costs to free up money to invest in growing digital businesses. Currently, only fewer people visit branches due to the growing popularity of mobile banking platforms. Such trends may drive the demand for data centers from the BFSI segment in the coming years, leading to major demand for the servers.
Understand The Key Trends Shaping This Market
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Rack Server to Hold Significant Share
- Rack servers are compact and efficient devices that can handle a variety of computing tasks and are commonly used in data center environments where space is at a premium. In South Korea, various end-user prefers rack server as it is more cost-effective than blade servers, especially for organizations that don't require the high density and modularity of blade server solutions.
- The Korean government has decided to lower the barriers to entry for cloud computing services in the country. Due to this move, foreign tech giants such as Amazon and Microsoft are expected to provide major demand for the rack servers. Despite growing concerns among KT, Naver, NHN, and other domestic cloud service providers over the possibility of foreign firms gaining dominance in the local market, tech firms from the United States and China have welcomed the proposed easing of regulations and are starting to look for experts in cloud computing services for the public sector.
- The government investment in the digital roadmap is expected to increase data center construction, leading to major demand for rack servers. Rack servers come in various configurations, including single-socket and dual-socket models, and can be customized to meet specific performance, storage, and networking requirements.
- South Korea is also at the forefront of new communication technology advances, such as 6G. It operates in a highly competitive but stable market, with substantial government backing driving the rollout of modern infrastructure in both the fixed and mobile sectors. Such a factor is expected to drive the market demand with increased network traffic.
