Poland's cybersecurity market

In the few paragraphs below I will take a peek inside the Polish cybersecurity market. The contents below were part of a larger report I wrote on behalf of a company, as such I have removed any sensitive information so that I can leave the reader with the core of the market research. The article focuses on a specific segment of Poland's cyber security market, namely banking, in which clients with big budgets and a need for prestige can be found. Funnily enough, prestige and cyber security are not commonly paired together, however, the recent media coverage of hacks makes any company's cybersecurity capabilities a sexy thing to flaunt in front of clients. So, let's get down to the nitty gritty.

(i) Poland's demographics

Let us look at Poland's demographics. We can see below, that 76% of the population use the web via desktops (40% of web users) and mobiles (59% of web users). This means that a large chunk of Poland’s population uses mobile and desktop operating systems and their associated stores: the App Store, Google Play and Windows Store.

Also the largest chunks of Poles by age are between and ages 20-45 and 50-64. So considering that Poland’s population is slowly declining, the core user-base for apps that use seriously confidential data (i.e. bank accounts, bank login details, personal electronic-IDs etc) is currently well represented.

The majority of Poland’s population is aware of the necessity of data privacy, this however does not prevent them from completing tasks digitally, says an analyst from We Are Social (https://bit.ly/2KDwGwe):

1. 55% of Poles prefer to complete tasks digitally.
2. 90% of Poles believe data privacy and protection are important.

(ii) The cybersecurity market in Poland

According to a PMR report, the value of the Polish cybersecurity market is estimated at PLN 1,5bln in 2018 (approx. EUR 350 mln), up from PLN 1,3bln (EUR 300 mln) the year before. This estimate does not include revenues from selling secure mass storage and backup solutions, nor does it include CCTV surveillance and its related products. Would those and its complementary goods and services be included then the estimated value would hover around PLN 5bln (EUR 1,16 bln). See the green histogram for past annual market values (https://bit.ly/2P5QVmL).
Upon interviewing cybersecurity providers the PMR report concludes, that, in Poland, hardware solutions are treated as a substitute for software solutions. For example, small to medium businesses almost exclusively use software-based firewalls and spam protection. Also, the market value of externally managed solutions is still negligible.

Finally, as per PMR, the most influential cybersec market factors in Poland are as follows:
Regulations (e.g. GDPR).
End-users are radically more aware now of cybersecurity than before, thus clearly growing demand for related products and services.
C-level managers growing awareness of cybersecurity.
A growing number of threats.
The media’s role in spreading awareness of cyber attacks.
Growing internet penetration and an ever growing amount of personal data to process.
The growing e-commerce market.
Poland’s macroeconomic situation.

(iii) The target market potential

Given that the world in general is experiencing tumultuous economic times one should look to satisfy the needs of companies, that have the luxury of planning budgets for cybersecurity. Luckily, in Poland that usually means large corporations and, what is even better is that their awareness and demand for such services is growing for the third year in a row (from PLN 1,17 bln to PLN 1,5 bln). Surely the explosion in technologies such as the cloud, decentralised ledgers, AI, cryptography and machine learning only make this a more fashionable and strategically necessary issue.

The market segments, that one should thus focus on are pharmaceuticals, banking, fintech and the Polish government. However, due to the desire to provide quality insights this article intends to be an inch wide and a mile deep as opposed to a mile wide and an inch deep. As such its focus is on Poland’s banking sector alone.

(iv) Banking: A hungry client

In Poland, a country of 38mln, banks serve 46,4mln clients out of which 44mln are retail clients (https://bit.ly/2Rbnulb), these seemingly inflated numbers account for regular retail customers as well as associations, voyevodeships, municipalities, cities and companies. Clearly, the Polish banking market has won over almost every client there is to the extent that many retail clients have multiple bank accounts; many a retail client opens multiple accounts in order to benefit from the differing services that banks offer.

Below, let us look at the amount active users each Polish bank has for their respective mobile app, these are mostly available on Google Play and the App Store, some are also available in the Windows Store:
The following table gives a representation of clients who used their mobile to log into their account at least once per month.

Thus, there are between 6,6 mln and 9,9 mln potential end-users of smartphone-based cybersecurity applications in Poland’s banking sector, right now (such "application shields" are embedded within the apps; these shields protect the user from downloading infected apps from, say, Google Play).

(v) Cyberattacks: demand for proactive defense is growing

Let us review a 2017 survey of almost 700 companies (https://bit.ly/2P5QVmL). The absolute majority of cases reported were (i) malware (32% by medium sized businesses and 42% by large sized businesses); (ii) attacks on employees’ computers (12% by medium sized businesses and 16% by large sized businesses); and (iii) attacks on company servers (6% by medium sized businesses and 15% by large sized businesses); then follow the less common attacks (but still in the 10% range among large businesses), such as DDOS attacks, database attacks and APT attacks.

Cisco Poland argued back in 2017, that there is ample awareness of cyberthreats, but that more action needs to be taken on behalf of managers and owners to live up to the task of protecting their companies. Surely, the text is made to create a sense of urgency for Cisco’s services, but that also shows that Cisco recognises that the cybersecurity market is yet to grow. Good news for a new market entrant, because when the tide rises, all ships go up.

65% of IT experts interviewed by Cisco claim that cybersecurity solutions have a two-fold benefit. The first is the obvious one: security. The second benefit, is winning the customer’s trust (https://bit.ly/2M5Yb29).

(vi) Entering the market as a new player

Cybersecurity is finding itself in a renewed infancy thanks to the second machine age. Prospective clients will have to invest in machine learning, AI and decentralised ledger technologies to remain relevant in the market. So the future for a new market entrant is almost guaranteed - as long as people find out about it.

Poland is a country where 70% of the adult population uses a smartphone; 6,6 million people use an app to manage their bank account; on average 16% out of 700 companies have experienced cyberattacks in the past year; and, cybersecurity is seen as a way to raise prestige among clients. As such the market is as ripe as ever to dabble in (a.k.a. purchase) new cybersecurity solutions.