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The global anti-money laundering software market size was valued at USD 1.65 billion in 2021 and is projected to grow from USD 1.82 billion in 2022 to USD 4.31 billion by 2029, exhibiting a CAGR of 13.0% during the forecast period. Based on our analysis, the global anti-money laundering software market exhibited an average growth of 8.5% in 2020 as compared to 2019.
Anti-Money Laundering (AML) software offers assistance to regulated organizations and financial institutions to prevent, report, and detect money laundering related misconducts in compliance with the requirements from financial regulators. This software uses the information from various solutions for managing financial transactions such as accounting software and ERP systems.
The global anti-money laundering software market growth can be attributed to several factors such as technological development of solutions for robust detection and rising importance of transaction monitoring among consumers. In addition, growth in IT spending, focus of financial institutions on digital payment related issues, and flow of investments by enterprises positively affect the global market.
Emergence of the COVID-19 Pandemic Increased the Investments and Collaborations for the Development of AML Software
The COVID-19 pandemic accelerated the adoption of digital services such as contactless payments, e-payment, online banking, and others, resulting in generation of huge volumes of customer data.
However, many financial service firms faced a remarkable increase in identity fraud through ransomware, synthetic identity, mobile device attacks, and other threats, which led to significant financial losses, hindering the anti-money laundering software growth for a short period of time.
According to the Anti-Money Laundering Preparedness Survey Report 2020 by Deloitte, a survey was conducted which included leading banks around South Asia to understand the challenges faced by banks in their Anti-Money Laundering (AML) compliance programs. According to the survey, it stated that around 45% of the banks are facing technological challenges due to integration with core banking systems. Also, 46% of the existing systems are unable to cover products and businesses in the transaction monitoring systems for a short period of time.
According to the Financial Action Task Force (FATF) report, governments and institutions around the globe are making efforts to combat money laundering. Also, various private sectors and regulators are collaborating to minimize the adverse effects of money laundering by offering cutting edge technology. Private and public sectors are deploying anti-money laundering solutions in the form of digital onboarding of customers.
Thus, growing funding and collaboration are projected to create substantial market opportunities in the coming years.
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Growing Adoption of Real-time Transactions Monitoring and RegTech Automation Acts as a Key Trend
Real-time transaction monitoring analyzes customer transactions and behavior that involves the investigation of previous and current customer data and interactions to provide a complete picture of their activity in real-time. Transaction monitoring feature of anti-money laundering software enables organizations to detect financial crimes before they occur or at an early stage. The adoption of real-time transaction monitoring in anti-money laundering helps financial institutions to detect potential instances of financial crime and intervene by preventing it from occurring at the point in time. For instance,
Similarly, RegTech (Regulatory Technology) offers banks and other financial institutions access to intelligent tools and processes that automate data collection, analysis, and visualization. RegTech assists banks to onboard customers faster, more effectively and with less customer contact. The emergence of AI RegTech solutions in the banking system is likely to surge the demand for anti-money laundering software in the coming years. For instance,
Adoption of Big Data Analytics in Anti-Money Laundering Solutions to Fuel the Market Growth
The increasing adoption of Big Data analytics helps enterprises to analyze businesses that can spot patterns and extract valuable insights from these data sets. Leveraging Big Data analytics is anticipated to create demand for anti-money laundering software. For instance,
Similarly, Big Data analytics is an ultimate tool for AML compliance as it can be personalized to improve and automate many AML compliance processes. Big Data analytics also helps to reduce the risk, detect fraud patterns and any data quality issues that lead to false positives.
The Big Data analytics solutions help financial institutions to examine current regulatory rules in terms of in-depth data. It helps to analyze customer’s onboarding, information of transactions, and fulfill the requirements associated with regulatory authorities. It also helps to identify the risks or problems in real-time and avoid potential breaches of rules before supervisory authorities.
High Cost and Operational Process to Hinder the Market Growth
High costs related with the deployment of software and complications associated with it are limiting the ability of early detection of fraudulent activities. Adapting practices to new and sometimes untested systems or technology solutions creates operational challenges.
Also, small & medium sized fintech companies often lack internal capacity or assurance to estimate the effectiveness of advanced solutions among a wide growing range of competing vendors and products, thereby creating major challenges in operating the solutions.
Thus, the aforementioned factors may hamper the anti-money laundering software market growth.
Implementation of Integrated Software among Organizations to Propel Market Growth
In terms of type, the market has been studied across standalone and integrated.
Integrated segment is expected to hold the maximum market share during the forecast period. Integrated software is expected to grow as it combines multiple solutions such as audit management, regulatory change management, and anti-money laundering software into one suite. Adopting the integrated software will help financial institutions to modify their methodology in managing risks to meet the demands of the evolving financial corporate standards.
Adoption of Software in SMEs for Business Growth to Create Growth Opportunities for the Market
Based on enterprise type, the anti-money laundering software market is divided into large enterprise and small & medium-sized enterprises.
Small & medium enterprises segment is expected to grow with maximum CAGR during the forecast period due to major focus on customer experience and funding on solutions. For instance,
Whereas, the large enterprise segment is expected to hold major market share due to increased demand for API deployment to improve scalability and agility as well as avoid risks.
Deployment of Cloud Model for Better Productivity to Boost the Market Growth
In terms of deployment, the market is bifurcated into cloud and on-premise.
The cloud segment held the largest share in 2021 and is anticipated to grow with the highest CAGR during the projection period. Cloud-based model is expected to grow due to increased efficiency and low costs of building an IT infrastructure. Also, cloud-native software provides businesses with new tools in the counter against financial crime. Additionally, the software as a service approach enables better scalability, efficiency, and price flexibility.
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Adoption of the Software by Bank and Neobanks for Risk Prevention Fuels the Market Growth
In terms of end-user, the market is classified into bank and neobanks, insurance, investment, crypto, and others.
The bank and neobanks segment held the largest share in 2021 and is anticipated to grow with the highest CAGR during the projection period. The banking industry growth is attributed to the growing adoption of software for identifying the risks and fulfilling AML obligations.
Additionally, technological alterations in financial organizations and the surge of e-payments increased the demand for more customer identity protection. Also, due to stringent directives, financial institutions and banks are adopting AI based AML solutions to deploy AML compliance with greater effectiveness.
North America Anti-Money Laundering Software Market Size, 2021 (USD Billion)
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Geographically, the market is divided into five major regions, North America, South America, Europe, the Middle East & Africa, and Asia Pacific.
North America is likely to hold the maximum market share throughout the projected period. It is expected to grow due to technological advancement, high number of end-users, and increase of growth strategies among major anti-money laundering software players. Adoption of AML software in the Banking, Financial Services, and Insurance (BFSI) industry in the U.S will likely increase the demand for AML software. For instance,
The Europe anti-money laundering software market share is expected to witness significant growth during the forecast period due to early adoption of new technologies, continuous developments, and new stringent data privacy laws such as AMLA, AMLD6, and AMLR. Also, funding to organizations by the U.K. government for innovation of the product may propel the market growth. For instance,
Asia Pacific is expected to show expanding growth during the forecast period. Developing nations in the region, such as India and Thailand, are making substantial developments toward digitization and facilitating robust banking solutions for national transactions security for regional banks and financial institutions. Similarly, growth in investments in countries, including South Korea, Southeast Asia, Oceania, and others to bring digital transformation across the countries is likely to fuel the adoption of anti-money laundering software.
The market will show moderate growth across the Middle East & Africa due to rising investments for the transformation of the economy digitally.
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South America will show growth opportunities due new AML regulations and deployment of new technologies in AML compliance. Rise in money laundering cases and demand for AML solutions are projected to accelerate the market growth in South America. For instance, according to the FATF report, Brazil will show progress on financial intelligence in criminal investigations. In January 2020, the Central Bank of Brazil improved AML compliance regulations to maximize anti-money laundering systems with advanced analytics.
Market Players to Drive Merger and Acquisition Strategies to Expand their Presence
The prominent anti-money laundering software players are focusing on expanding their global presence through merger and acquisition strategies. Additionally, key players are investing on the software to leverage AI and machine learning technologies for development and enhancing operational efficiency. The companies are aiming to acquire small and local firms to expand their business presence. For instance,
An Infographic Representation of Anti-Money Laundering Software Market
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The anti-money laundering software market report provides a detailed analysis of the market. It focuses on key points such as leading companies, software types, and leading applications of the software and services. Besides this, the report offers understandings into the AML software market trends and highlights key industry developments. In addition to the above mentioned factors, the report contains several factors that have contributed to the growth of the market in recent years.
Value (USD Billion)
By Type, Enterprise Type, Deployment, End-user, and Region
By Enterprise Type
The market is projected to reach USD 4.31 billion by 2029.
In 2021, the market value stood at USD 1.65 billion.
The market is projected to grow at a CAGR of 13.0% during the forecast period.
The cloud segment is likely to lead the market.
The adoption of Big Data analytics to drive the market.
Oracle, ACI Worldwide, Eastnets, AML Partners, Alessa, Acuant, Inc., Feedzai, SAS Institute Inc., Ondato, and Sanction Scanner are the top players in the global market.
North America is expected to hold the highest market share.
Asia Pacific is expected to exhibit the highest growth rate during the forecast period.
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