Reconciliation Software Market Size, Share & COVID-19 Impact Analysis, By Deployment (Cloud, On-premise), By Enterprise Size (Small and Medium-sized Enterprises and Large Enterprises), By End-use (Banks, Financial Institutions, and Insurance), and Regional Forecast, 2023-2030

The reconciliation software market size was valued at USD 1.13 billion in 2022 and is projected to grow from USD 1.28 billion in 2023 to USD 3.40 billion by 2030, exhibiting a CAGR of 14.9% during the forecast period. North America dominated the global market with a share of 35.4% in 2022.

Reconciliation software matches two financial records to ensure that they are in unison. It compares the balances in a business’s accounting records to the equivalent information on a bank statement. Reconciliation helps organizations to confirm that their internal records are accurate, consistent, and complete. Key players in the global market include Broadridge Financial Solutions, Inc., Tata Consultancy Services Limited, Xero Limited, Gresham Technologies plc, and BlackLine Inc. are offering various reconciliation solutions. Major market players are focused on seeking relevant partnerships that help them reach a huge customer base. These partnerships help in the launch of enhanced solutions. For instance,

In January 2023, FLX Networks, which specializes in modernizing, simplifying, and driving engagement between financial advisors and asset managers, partnered with Broadridge Financial Solutions, Inc. With this partnership, the company became a preferred data and analytics provider for asset management firms.

COVID-19 IMPACT

Robust Growth Opportunities Amid COVID-19 Pandemic Propelled Market Development

Automated banking software has benefited banks over the past few years. However, with the advent of the COVID-19 pandemic, the market witnessed a steady rise in 2020. This rise is attributed to the cashless transactions adopted due to governments enforcing lockdown restrictions worldwide.

Additionally, the rise in the usage of e-commerce due to the pandemic and the increase in online transactions across the globe escalated the usage of reconciliation solutions during the pandemic. Furthermore, integrating advanced technologies such as AR/VR and artificial intelligence (AI), among others, has enhanced the solution's capabilities. Thus, the market is anticipated to flourish in the upcoming years after the recovery from the COVID-19 pandemic globally. Thereby promising healthy growth for the market.

Along with this, the rise in demand for e-commerce services and early adoption of neobanks across the BFSI sector expects the global account reconciliation software market size in the upcoming years to grow significantly.

LATEST TRENDS

Integration of Advanced Technologies in Reconciliation Software to Support Market Expansion

Digitization has been rising daily across all industry verticals. Rapidly transforming financial services ensure a growing customer base and advanced capabilities of solutions. According to a survey conducted by Deloitte, the most widely implemented technology in the banking sector covered by the study is the cloud, which accounted for about 45%, followed by business intelligence at 37%.

Companies are investing in advanced technology such as artificial intelligence to benefit from these enhanced features and cope with rapidly changing user preferences. For instance, in December 2021, Xero enhanced its existing reconciliation solution with an artificial intelligence-based bank reconciliation prediction feature. This feature predicts contact and account codes for business transactions that cannot be tied to specific bills or invoices. Thus, the rising amount of innovative software across the globe is expected to drive the market in the coming years.

DRIVING FACTORS

Growing Volume of Security Breaches and Frauds to Accelerate the Adoption of Reconciliation Solutions

The rising volume of security breaches and frauds has crippled several industries across the globe. In financial sectors, fintech-related frauds have showcased a higher percentage than in other industries. According to PwC’s Global Economic Crime and Fraud Survey, financial services experienced 44% of customer fraud. Along with this, 38% experienced cybercrime in 2022.

Banks and financial institutes are increasingly adopting reconciliation solutions to mitigate these security breaches. Reconciliation tools help prevent bank losses and disputes due to lack of reconciliation of incomplete and reversed transactions. Adopting an automated banking solution can simplify operations, facilitate resolving and identifying bottlenecks, and optimize efforts. It allows standardization of procedures and prioritization & supervision of key accounts, leading to real-time information and analysis delivery, benefiting strategic business decision-making.

Thus, an increase in financial services fraud drives the global account reconciliation software market growth in the recent years.

Rising Number of Strategic Alliances Among Key Players to Aid Market Augmentation

Strategic collaborations and partnerships are a boon for any business’s internal growth. Key market players are increasingly engaging in strategic alliances to enhance their existing solutions with the capabilities of the partnered firm. This strategy adopted by market players helps them reach a huge customer base, positively impacting their position in the reconciliation ecosystem.

Several companies, including Trintech, ReconArt, and Gresham Technologies plc are collaborating with major reconciliation players worldwide to boost their portfolio and offerings.

For instance, in April 2022, ReconArt expanded its partnership relations across the Asia Pacific region. The company's technologically advanced account reconciliation and transaction matching platform is gaining acclamation and visibility among financial management consultants and technology integrators in Hong Kong, Indonesia, India, Vietnam, and Pakistan.

RESTRAINING FACTORS

Higher Premium Cost of Reconciliation Solutions to Hinder Market Growth

The market is likely to be hindered by the high cost of reconciliation software. Along with this, freely available solutions lure small businesses to conduct their basic reconciliation processes. Most small businesses cannot invest in high-premium software tools. Instead, these businesses tend to adopt freely available solutions. Thus, the higher premium cost of reconciliation solutions and the availability of free solutions could limit the market development during the forecast duration.

SEGMENTATION

By Deployment Analysis 

On-premises Segment to Dominate Due to Better Data Security

Based on deployment, the market share is bifurcated into cloud and on-premises. The on-premises deployment of reconciliation software has been dominating the market in recent years. This demand is due to the better data security and higher rate of adoption of the software among the SME’s.

On the flip side, the cloud segment is expected to thrive at an accelerated pace in the upcoming years. Neo banking is an emerging concept in the banking sector. The popularity of neo-banking has grown significantly during the COVID-19 pandemic. Social distancing norms during the pandemic and increased reliance on technology have pushed users to embrace digital banking instead of traditional banking to fulfill their financial needs. This adoption has surged the demand for cloud-based reconciliation solutions at a rapid pace.

By Enterprise Size Analysis

Rising Popularity of Reconciliation Software to Provide Large Enterprises Significant Traction

By enterprise size, the global reconciliation software market share is bifurcated into Small and Medium-sized Enterprises (SMEs) and large enterprises. The large enterprises are expected to hold the largest share in 2022. An automated banking solution enables large businesses to eliminate human error and provide efficient reconciliation capabilities.

SME’s are expected to rise at a steady CAGR during 2023-2030 owing to the growing demand for cloud based reconciliation services.

By End-Use Analysis

Market Share to Rise Due to Rising Adoption of Reconciliation Solutions across Banks

In terms of end-use, the market share is segmented into banks, financial institutions, and insurance. Banks segment is anticipated to capture the largest market share in 2022. Traditional manual reconciliation processes are the most cost-demanding and the least efficient in a company. According to an EY survey, up to 59% of a financial sector's tools and resources are spent managing transaction-intensive processes.

Adopting an automated banking solution follows a standard, risk-based approach irrespective of the number of companies, banks, businesses, and accounts. It includes a recorded trail of all reconciliation activity for the internal and external auditors, enhancing the reconciliation processes and reducing the security issues accompanying the process. Thus, these advantages over traditional processes have surged software adoption among banking sectors. Along with holding the largest market share in 2022, the banks are expected to hold similar dominance in upcoming years.

REGIONAL ANALYSIS

Based on geography, the market is subdivided into five key regions: Europe, North America, South America, Asia Pacific, and the Middle East & Africa.  

The market for reconciliation in North America is likely to experience healthy growth owing to the early adoption of advanced technologies and a highly competitive landscape. The regional growth is also attributable to the healthy rate of cloud adoption and the readiness of end-users to adopt advanced solutions. The rising demand for cloud-based reconciliation solutions across the region constantly drives market growth.

Asia Pacific is expected to record significant growth during 2023-2030. This growth is attributable to the rising number of startups adopting advanced reconciliation solutions. The region is expected to have the highest growth rate among other developed regions over the forecast period. One of the primary reasons is that various regional governments are actively supporting developing nations to adopt reconciliation solutions, which helps the Asia Pacific region to lead the market in every aspect.

Furthermore, Europe is expected to grow steadily in the upcoming years. According to European organizations, around 70% of the organizations in Europe are migrating their workloads to the cloud. This is primarily attributed to optimizing costs due to cloud usage and around 50% of organizations have deployed a cloud-first strategy to increase business efficiency. This will create various market opportunities for key players to expand their core banking software offerings across the U.K., Germany, France, Spain, Italy, and other countries.

KEY INDUSTRY PLAYERS

The global market is consolidated with leading players such as BlackLine Inc., Broadridge Financial Solutions, Inc., Tata Consultancy Services Limited, Xero Limited, Gresham Technologies plc, SmartStream Technologies Ltd, and DUCO. These market players are expanding by adopting business strategies such as acquisitions, mergers, product launches, partnerships, and collaborations. For instance,

Soaring Emphasis on Strategic Acquisition and Partnerships Among Market Players to Impact Market Positively

• In June 2021, Gresham acquired Electra Information Systems, Inc. to reinforce its market leadership position in reconciliation software for financial markets and strengthen its rapidly accelerating operations in North America.


• In October 2021, Stripe acquired an India headquartered payments reconciliation software provider, Recko. With this acquisition, the company aims to speed up its internet businesses to automate payments reconciliation.

LIST OF KEY COMPANIES PROFILED IN THE REPORT:

• BlackLine Inc. (U.S.)


• Broadridge Financial Solutions, Inc. (U.S.)


• Tata Consultancy Services Limited (India)


• Xero Limited (New Zealand)


• Gresham Technologies plc (U.K.)


• SmartStream Technologies ltd (U.K.)


• DUCO (U.K.)


• ReconArt, Inc. (U.S.)


• SolveXia (Australia)


• StatementMatching.com Limited (U.K.)

KEY INDUSTRY DEVELOPMENTS:

• June 2022 - DUCO expanded its footprint by opening its Boston office to cater to its increased customer base in North America.


• March 2022 – DimeTyd introduced an enhancement of its platform with the availability of reconciliation consultancy and cash application. This new feature integrates machine learning and automation to help online product merchants process through Amazon's Marketplace, audit invoices, and ensure remittances.


• January 2022 - BlackLine, Inc. acquired FourQ Systems, Inc. to augment its present intercompany accounting automation abilities. This acquisition further strengthens the company’s long-term plan of modernizing and transforming finance and accounting.


• August 2021 – SmartStream Technologies launched SmartStream Air Version 4, an enhancement to provide uninterrupted streaming of reconciliation software using advanced technologies such as AI and the cloud. This enhanced version manages large portions of data, supporting continuous and real-time reconciliations. Additionally, it checks for completeness and accuracy without reloading unmatched items.


• June 2021 - Order2Cash partnered with Cashbook to enhance automation, integration, and quicker reconciliation processes across the order-to-cash sequence on a global scale.

REPORT COVERAGE

The report analyzes prime regions globally to provide a better understanding of the prominent aspects driving industry growth. Furthermore, the report highlights the latest industry and market trends at a global level. Along with this, it also highlights some of the growth-stimulating factors and restraints, helping the reader to gain an overview of the market.

Report Scope & Segmentation