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Core Banking Software Market Size, Share & COVID-19 Impact Analysis, By Deployment (SaaS/Hosted, Licensed), By Banking Type (Large Banks, Midsize Banks, Small Banks, Community Banks, and Credit Unions), By End-user (Retail Banking, Treasury, Corporate Banking, and Wealth Management), and Regional Forecast, 2020-2027

Region : Global | Format: PDF | Report ID: FBI104392

 

KEY MARKET INSIGHTS

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The global core banking software market size was USD 8.17 billion in 2019 and is projected to reach USD 28.83 billion by 2027, exhibiting a CAGR of 17.4% during the forecast period.


Core banking software (CBS) is a back-end solution that is deployed by banking organizations to maintain the flow of banking activities such as payment, transactions, posts updates to user accounts, and other financial records. The software offers online centralized banking activities in real-time to users. Various banks are implementing banking software to assist their users to perform multiple bank related activities, such as loan process, money transactions, debts, and access to their respective accounts.


The increasing investments by key players on fintech technologies, banking software, and the rising internet penetration are likely to drive the growth of the market. According to Gartner, in 2019, the banking industry was expected to invest USD 65.3 billion in the core software globally. In addition, the surging need for managing customer accounts from a single server is also set to boost the growth of this market.


COVID-19 Impact


Companies Plan to Develop Advanced Banking System amid COVID-19 Pandemic


The COVID-19 pandemic has highly impacted the work culture across every industry vertical. The situation has forced various banks and other financial institutes to allow their employees to adopt the work from home (WFH) policy. This crisis has also led to a major repositioning in the global financial market is developing as the financial sector is struggling with sudden changes in interest rates and delayed lease payments. Thus, it is challenging for many banks and financial institutions to restore the changes in the overall credit and loan management scenario owing to the current pandemic. To overcome such challenges, key market players are focusing on launching advanced software solutions to accelerate their digital transformation.



  • For instance, in April 2020, Temenos AG launched its advanced SaaS-based eight propositions by using advanced cloud technologies and Explainable AI (XAI), to assist various banks in their immediate response amidst the COVID-19 pandemic.


Such active initiatives are expected to drive the demand for core banking software in the coming years.


LATEST TRENDS


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Increasing Adoption of Artificial Intelligence-based Banking Systems is a Current Trend


The rising adoption of technologies such as AI, big data, and the cloud is changing the landscape of the banking industry. The integration of such technologies with the banking process assists to advance their visualization capabilities, resolve customer queries, and make complicated data usable. The technologies help in increasing connectivity and provide advanced security methods in banks & financial institutions.


The AI-based core banking systems provide real-time insights to end-users and help in improving network security, accelerate digital businesses, and offer a better consumer experience. The rising adoption of such technologies is expected to create various opportunities for players in the market. Key companies are focusing on completing partnerships and collaborations with other players to launch advanced solutions based on core technologies, such as AI and others.



  • For instance, in July 2019, Floatbot, a Bangalore-based AI startup company, partnered up with Andhra Bank to launch its AI Chatbot - "ABHi". It aims to digitally automate and engage customer support.


DRIVING FACTORS


Rising Adoption of Cloud-based Solutions among Enterprises to Aid Growth


One of the significant market drivers is the increasing adoption of cloud-based or SaaS-based banking platforms offered by Finastra, FIS global, and Temenos AG. The cloud-based platform allows banking organizations to monitor the payment, transaction, and other banking activities. Thus, the rising demand for productivity and improvement in enterprises will encourage the growth of the market. Key players are also focusing on launching new products to gain a competitive edge in the market.



  • For instance, in January 2019, Temenos AG launched its cloud-based digital front office product and core banking solution - Temenos Infinity and Temenos Transact, respectively. These new products would provide comprehensive banking functionality to its consumers. It aims to accelerate the adoption of cloud among enterprises.


Therefore, the rising adoption of cloud-based banking platforms by various banks is likely to drive the market growth of core banking software in the forthcoming years. Also, other drivers such as the rising usage of big data, payment as a service (PaaS), cybersecurity, and remote banking solutions, would propel the market during the forecast period.


RESTRAINING FACTORS


Information Security and Privacy Concerns Associated with Banking System May Hinder Growth


With the gaining popularity of advanced core banking solutions, security concerns about unencrypted data, application vulnerabilities, mobile malware, and information loss are also increasing. Information security and privacy concerns can reduce the revenues in credit unions, corporate banks, and financial institutes. Moreover, not all core banking systems provide operational flexibility at the scale, which might result in data breach concerns and regulatory risks. According to the financial conduct authority (FCA) reports, data breaches at many financial institutions and banks have increased by over 1,000% in the 2017-2018 period.


In addition, banks in rural areas are facing various challenges to meet customer requirements in terms of technology, which is thereby acting as a restraint for this market. Also, the lack of awareness about advanced banking technologies among businesses, strict government guidelines, rules and regulations, and stringent bank regulations are likely to hinder the growth of the market.


SEGMENTATION


By Deployment Analysis


SaaS/Hosted Segment to Dominate Backed by Need to Improve Banking Activities


Based on the deployment, the market is divided into SaaS/hosted and licensed. Among these, the SaaS/hosted segment is estimated to hold the largest core banking software market share in the near future. The growth is attributable to the rising demand for cloud-based banking systems among enterprises. Such solutions would assist end-users to improve banking activities including calculating interests, servicing loans, processing withdrawals, and deposits.


The licensed segment is likely to show radical growth owing to the rising adoption of licensed-based banking solutions to reduce security concerns and operational costs. End-users are focusing on implementing numerous licensed banking engines to carry out financial activities without any need for payment processors. For instance, Finacle is a licensed core banking software product offered by Infosys that provides universal digital banking functionality to various banks.


By Banking Type Analysis


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Increasing Fintech Investments by Large Banks to Aid Growth of the Segment


Based on the banking type, the market is further segregated into large banks, midsize banks, small banks, community banks, and credit unions.


The large bank segment is anticipated to exhibit the highest market share in the coming years. The rising adoption of connected devices and increasing penetration of the internet to analyze and monitor the banking process is expected to fuel the growth of this segment.


The community bank segment is anticipated to experience the highest growth rate owing to the rising necessity to increase the operational and production efficiency of the banking industry. In addition to this, the increasing adoption of advanced banking systems among banking types such as midsize banks, small banks, and credit unions, is likely to fuel the growth of the market.  


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By End-user Analysis


Corporate Banks Segment to Gain Traction from Increasing Adoption of Advanced Banking Systems


Based on the end-user, the market is segmented into retail banking, treasury, corporate banking, and wealth management.


The corporate banking segment is likely to hold the dominant share during the predicted period, owing to the increasing adoption of online and mobile banking software among users to track and monitor banking activities in real-time.


The wealth management segment is expected to gain traction in the coming years. The major growth drivers for this segment are the rising digitalization & process automation, and increasing demand for investments modules. Besides, the rising implementation of such banking solutions across retail banking and treasury is expected to propel the growth of the segment.


REGIONAL INSIGHTS


North America Core Banking Software Market Size, 2019 (USD Billion)

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Geographically, the core banking software market is segmented across five major regions, namely, North America, Europe, Asia Pacific, the Middle East & Africa, and South America.


North America is expected to dominate the market in terms of revenue. The significant adoption of innovative banking solutions by prominent banks such as HSBC Holdings plc, Canadian Western Bank (CWB), and others in the region is likely to drive the growth of the market. Also, the presence of major key players such as Fidelity National Information Services, Inc. (FIS), VSoft Corporation, and others are expected to boost the market size for banking solutions across the U.S. and Canada. These players are focusing on launching advanced banking systems in order to improve their product portfolios.



  • For instance, in August 2020, Fidelity National Information Services, Inc. (FIS) launched its subscription-based core banking software, “ClearEdge” for community banks. It aims to offer banks cost-effective, pre-integrated, and comprehensive technologies to enhance the customer experience.


Asia Pacific is likely to emerge as the fastest-growing regional market during the estimated period. The growth in this region is likely to be driven by the rising adoption of web-based business and mobile applications in the banking sector. In addition to that, the growing economies of countries, such as India, South Korea, China, Japan, Oceania, and others, are anticipated to fuel the adoption of innovative banking software.


Europe is expected to develop with a considerable growth rate owing to the presence of a significant number of core banking solution providers. The Middle East & Africa (MEA) is likely to experience radical growth in the forthcoming years. The rising fintech investments by governments to adopt advanced technologies such as 5G, AI, blockchain, big data, and cloud, would drive the market in MEA. The market in South America is set to grow gradually owing to the increasing adoption of digital banking solutions among banks.


KEY INDUSTRY PLAYERS


Emphasis of Key Players on Developing Advanced Banking Solutions Will Strengthen Their Positions


Finastra, Fiserv, Inc., Fidelity National Information Services, Inc. (FIS), and Temenos AG, among others, are some of the major players in the global industry. They are developing banking software solutions with advanced technologies such as cloud, big data, AI, blockchain, and others. Also, the high competition in the market is forcing service providers to focus on the acquisition strategy for strengthening their positions. Numerous organizations are completing partnerships with digital banking platform vendors to offer banks and credit unions facilities. Key players are providing their financial solutions and digital platforms to different banks and use their feedback to enhance the capabilities of their solutions.


LIST OF KEY COMPANIES PROFILED:



  • Alphabet Inc. (Google LLC) (California, United States)

  • SAP SE (Walldorf, Germany)

  • International Business Machines Corporation (IBM) (New York, United States)

  • Oracle Corporation (California, United States)

  • Microsoft Corporation (Washington, United States)

  • Infosys Limited (Bengaluru, India)

  • Tata Consultancy Services Limited (Mumbai, India)

  • Capgemini SE (Paris, France)

  • HCL Technologies Limited (Noida, India)

  • Intellicus Technologies (California, United States)

  • NCR Corporation (Georgia, United States)

  • Finastra (London, United Kingdom)

  • Wipro Limited (Bengaluru, India)

  • Fiserv, Inc. (Wisconsin, United States)

  • Temenos AG (Geneva, Switzerland)

  • Fidelity National Information Services, Inc. (FIS) (Florida, United States)

  • Jack Henry & Associates, Inc. (Missouri, United States)

  • Unisys Corporation (Pennsylvania, United States)

  • VSoft Technologies Pvt. Ltd. (Telangana, India)

  • Computer Services, Inc. (CSI) (Kentucky, United States)

  • C-Edge Technologies Ltd. (Mumbai, India)


KEY INDUSTRY DEVELOPMENTS:



  • January 2020: - Union Bank, MUFG’s U.S. subsidiary, partnered up with Fidelity National Information Services, Inc. (FIS) to deliver a next-generation core banking platform. It includes the FIS Digital One Omnichannel platform that would offer banks with a range of advanced capabilities to benefit consumers. Union Bank will use FIS’s core banking platform to drive innovation and address the evolving needs of its customers.


REPORT COVERAGE


An Infographic Representation of Core Banking Software Market

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The core banking software market research report provides a detailed analysis of the market, research services and focuses on key aspects such as leading companies, product types, and leading applications of the product. In research methodology, it identifies revenues of key players and service providers in major countries across regions. Besides this, it offers qualitative and quantitative insights into the market trends and highlights key industry developments of core banking software. In addition to the aforementioned factors, it encompasses several factors that have contributed to the growth of the advanced market over recent years.


Report Scope and Segmentation











































 ATTRIBUTE



  DETAILS



Study Period



  2016 – 2027



Base Year



  2019



Forecast Period



  2020 – 2027



Historical Period



  2016 – 2018



Unit



  Value (USD billion)



 


 


 


 


 


 


 


 


 


Segmentation



By Deployment



  • Saas/Hosted

  • Licensed



By Banking Type



  • Large Banks

  • Midsize Banks

  • Small Banks

  • Community Banks

  • Credit Unions



By End-user



  • Retail Banking

  • Treasury

  • Corporate Banking

  • Wealth Management



By Region



  • North America (By Deployment, By Banking Type, By End-user, and By Country)

    • U.S. (By Banking Type)

    • Canada (By Banking Type)

    • Mexico (By Banking Type)



  • Europe (By Deployment, By Banking Type, By End-user, and By Country)

    • UK (By Banking Type)

    • Germany (By Banking Type)

    • France (By Banking Type)

    • Italy (By Banking Type)

    • Spain (By Banking Type)

    • Russia (By Banking Type)

    • Benelux (By Banking Type)

    • Nordics (By Banking Type)

    • Rest of Europe





  • Asia Pacific (By Deployment, By Banking Type, By End-user, and By Country)

    • China (By Banking Type)

    • India (By Banking Type)

    • Japan (By Banking Type)

    • South Korea (By Banking Type)

    • ASEAN (By Banking Type)

    • Oceania (By Banking Type)

    • Rest of Asia Pacific





  • Middle East & Africa (By Deployment, By Banking Type, By End-user, and By Country)

    • Turkey (By Banking Type)

    • Israel (By Banking Type)

    • GCC (By Banking Type)

    • North Africa (By Banking Type)

    • South Africa (By Banking Type)

    • Rest of the Middle East & Africa





  • South America (By Deployment, By Banking Type, By End-user, and By Country)

    • Brazil (By Banking Type)

    • Argentina (By Banking Type)

    • Rest of South America





Frequently Asked Questions

Fortune Business Insights says that the global market value stood at USD 8.17 billion in 2019.

By 2027, the market size is expected to reach USD 28.83 billion.

The market is expected to grow at a CAGR of 17.4% in the forecast period (2020-2027).

Within deployment, the SaaS/Hosted segment is expected to lead the market during the forecast period.

The rising adoption of cloud-based solutions among enterprises is one of the key market drivers.

Finastra, Fiserv, Inc., Fidelity National Information Services, Inc. (FIS), Google LLC, and Temenos AG are the top companies in the market.

Based on end-users, the corporate banking segment holds the major market share.

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Core Banking Software Market Size, Share and Global Industry Trend Forecast till 2026
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