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Core Banking Software Market Size, Share & COVID-19 Impact Analysis, By Deployment (SaaS/Hosted and 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, 2023-2030

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

 

KEY MARKET INSIGHTS

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The core banking software market size was valued at USD 12.51 billion in 2022 and is projected to grow from USD 14.54 billion in 2023 to USD 47.37 billion by 2030, exhibiting a CAGR of 18.4% during the forecast period. North America dominated the global market with a share of 44.12% in 2022.


In the scope, we have considered core banking solutions provided by key players such as Temenos Transact, TCS BaNCS, Flexcube, FIS Profile, SAP Transactional Banking, and Finacle Core Banking Solution.


Core Banking Software (CBS) is a back-end solution that banking organizations deploy to maintain the flow of banking activities such as transactions, payments, and other financial records. It offers online centralized banking activities in real-time to users. Various banks are implementing CBS to assist their users in performing multiple bank-related activities such as debts, loan processes, money transactions, and access to their respective accounts. The increasing investments by key players in fintech technologies, CBS, and others are expected to drive the growth of the market. In addition, the rising need for the management of customer accounts from a single server is set to boost the core banking software market growth.   


COVID-19 IMPACT


Rising Focus Toward the Development of Advanced Banking Systems Amid COVID-19 Pandemic Bolstered Market Growth


The pandemic forced numerous banks and other financial institutes and their employees to adopt the WFH (work from home) policy. The COVID-19 crisis caused a significant shift in the worldwide financial market, as the financial industry is grappling with abrupt changes in interest rates and deferred rent payments. Thus, it is challenging for many financial institutions and banks to restore the changes in the overall credit and loan management scenario owing to the current pandemic. According to the IDC COVID-19 Impact Report, less than 20% of the financial institutions globally report being back to a “new normal”. Additionally, the study revealed that 89% of the banks in North America, and 83% of banks in Europe and MEA continue to enhance operational resilience. In contrast, 77% of banks in Asia Pacific, where the pandemic had an earlier impact, had resumed their emphasis on innovation and implementation of core banking solutions for long-term transformative projects.


Thus, the COVID-19 pandemic slightly hampered the market due to imposed restrictions. However, as the restrictions relaxed, the market presented a healthy growth rate, which further propels the market.


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 the cloud, Big Data, and Artificial Intelligence (AI) 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 providing advanced security methods in banks & financial institutions. According to SAS insights, 30% of the employees in the banking industry rely and trust AI driven outputs and utilize them for enhanced business analysis.


The AI-based core banking software provides real-time insights to end-users and helps improve network security, accelerating digital businesses, and offering a better consumer experience. The rising adoption of such technologies is expected to create various opportunities for players in the market. Key companies focus on completing partnerships and collaborations with other players to launch advanced solutions on the basis of core technologies such as AI and others. For instance, in January 2022, Temenos AG launched its Buy-Now-Pay-Later (BNPL) banking service. The service will create an opportunity for banks and fintechs to generate more revenue and help them to build their relationship with customers and merchants.


DRIVING FACTORS


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


One of the significant market drivers is the rising adoption of SaaS-based or cloud-based banking platforms provided by software specialists such as Finastra, FIS global, and Temenos AG. Cloud-based platforms allow banking organizations to monitor payments, transactions, and other banking activities. Thus, the rising demand for productivity and improvement in enterprises will encourage the growth of the market. Key players are focusing on launching new products to gain a competitive edge in the market. For instance, in January 2023, Kenya based Fintech Company – Kwara acquired IRNET Coop to deploy a cloud-based core banking platform. It also gained their existing consumer base as IRNET was a subordinate partner of Kenya Union of Savings and Credit Cooperatives (KUSCC). These new products would provide comprehensive banking functionality to its consumers. It aims to accelerate the adoption of the cloud among enterprises.


According to Enterprise Cloud Index (ECI) 2022, cloud adoption in BFSI industries is expected to double in three years, boosting the market from 26% to 56%. Therefore, the rising adoption of cloud-based solutions and banking platforms by various banks is expected to drive the market growth in the forthcoming years. Also, the rising usage of Big Data, Payment as a Service (PaaS), cyber security, and remote banking solutions is expected to boost the market expansion during the forecast period.


RESTRAINING FACTORS


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


With the soaring popularity of advanced core banking software, 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. According to IBM X-force 2021 report, 22.4% of cyber-attacks were targeted toward financial and insurance organizations. Out of these attacks, 70% were directed toward banks, 16% were aimed at insurance organizations, and the remaining 14% were targeted at other financial organizations. Thus, with growing advancements, the concern for data safety is increasing.


SEGMENTATION


By Deployment Analysis


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


Based on deployment, the market is bifurcated into SaaS/hosted and licensed. Among these, the SaaS/hosted segment is estimated to hold the largest market share with highest CAGR in the estimated study timeframe. The growth is attributable to enterprises' rising demand for cloud-based banking systems. Such solutions would assist end-users in improving banking activities, including calculating interests, servicing loans, processing withdrawals, and deposits. According to the Future of Cloud in Banking report, 60% of banks in North America are increasing their cloud investments in the upcoming years. Similarly, 82% in EMEA and 83% in APAC regions for cloud investments direct the market toward a healthy growth in cloud adoption.


The licensed segment is expected to depict 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 Banking System


Based on banking type, the market is classified into small banks, midsize banks, large banks, community banks, and credit unions. During the forecast period, it is expected that large banks will hold the largest core banking software market share. The growth is expected to be driven by the rising adoption of interconnected devices and increasing use of the internet to analyze and oversee banking operations.


Community banks segment is anticipated to experience the highest growth rate owing to the heightened necessity to increase the operational and production efficiency of the banking industry. In addition, the increasing adoption of advanced core banking software among banking types, such as midsize banks, small banks, and credit unions, is expected to fuel the market growth.


By End-user Analysis


Corporate Banking to Gain Traction from Increasing Adoption of Advanced Banking System


By end-user, the market is divided 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 increasing adoption of online and mobile banking software among users to track and monitor banking activities in real-time.


Wealth management segment is projected to exhibit the highest growth rate and is expected to gain traction in the coming years. Major factors for the growth of this sector are rising digitalization & process automation and increasing demand for investment modules. Besides, the rising implementation of such banking solutions across retail banking and treasury is expected to propel the market growth.


REGIONAL INSIGHTS


North America Core Banking Software Market Size, 2022 (USD Billion)

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The global market is studied across five regions, North America, Asia Pacific, Europe, the Middle East & Africa, and South America.


North America is expected to dominate the market share in terms of revenue. The widespread adoption of innovative banking solutions by prominent, such as HSBC Holdings plc, Canadian Western Bank (CWB), and others, in the region is likely to drive the market growth. Also, 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 to improve their product portfolios.


Asia Pacific 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 businesses and mobile applications in the banking sector. In addition, the growing economies of countries, such as India, China, Vietnam, and others, are anticipated to fuel the adoption of innovative banking software.


Europe is expected to develop at a healthy growth rate due to a significant number of market players such as Finastra International Ltd., SAP SE, and Tenemos AG among others. These companies contribute to the enhanced deployments and core banking software advancements in the region.


The Middle East & Africa (MEA) is expected 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 the MEA. For instance, in March 2021, Hellenic Bank partnered with Backbase, which primarily provided an engagement banking platform with additional digital banking services. The partnership resulted in the launch of a transformed retail core banking platform, which increased their clientele by 16% in the Middle East.


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The market in South America is set to grow gradually owing to the increasing adoption of digital banking solutions among banks. For instance, in February 2021, Rabobank in Brazil collaborated with Oracle Corporation to revamp digital payments services.


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 are some of the major players in the global fintech industry. They are developing core banking software solutions with advanced technologies such as cloud, Big Data, AI, blockchain, and others. Additionally, intense competition in the market is causing service providers to concentrate their efforts on acquisition strategies aimed at fortifying their positions. Numerous organizations are entering into 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. For instance,


September 2021: SAP SE launched Fioneer, a joint venture between SAP SE and Dediq GmbH. SAP Fioneer provides new solutions to assist its consumers in the constantly evolving insurance and banking industries.


August 2021: W1TTY is implementing Oracle Banking APIs, Oracle FLEXCUBE, and banking payments. These form part of the Oracle Banking suite, which includes digital experience, real-time payments, and digital core and applications for corporate and retail banking.


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 amid the COVID-19 pandemic. Such active initiatives are expected to drive the demand for CBS in the coming years.


List of Key Companies Profiled:



KEY INDUSTRY DEVELOPMENTS



  • April 2023: Oracle FS in association with Profinch (Oracle’s FLEXCUBE implementation partner) is modernizing Ethiopia-based OMO Bank’s core banking software along with new fraud prevention and anti-money laundering (AML) software.

  • November 2022: Invest Bank, a leading commercial bank in the UAE, partnered with NdcTech, to upgrade its core banking software with the assistance of Tenemos AG. The bank would implement a comprehensive retail and wholesale banking solution on the Tenemos banking cloud to initialize digital transformation and implement the SaaS model for banking operations.

  • March 2022 – AVZ launched a retail core banking platform, which includes quick opening of bank accounts, affordable prices, and flexibility. The company also provided additional financial services which resulted in quick adoption and growth in business.

  • April 2021 – Dediq GmbH and SAP SE formed a strategic alliance for the financial services sector. The two companies aim to expand SAP’s financial service offerings with significant investment in new products.  The partnership will drive innovation in core insurance, CBS, and finance solutions specifically for the financial services industry.

  • March 2021 – Hellenic Bank teamed up with Backbase, a provider of engagement banking platforms and supplementary digital banking services. This partnership resulted in the launch of a retail core banking platform, which increased their clientele by 16%.

  • October 2020 – Temenos AG launched a real-time data platform, Temenos Transact Data Hub. The new hub supports all database platforms and can be accessible via SaaS from Temenos cloud. It helps banks in solving data transformation goals while upgrading the core system.


REPORT COVERAGE


An Infographic Representation of Core Banking Software Market

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The research report offers an in-depth analysis of the market, focusing on crucial aspects such as major companies and dominant applications of the product. It also casts light on important industry advancements and provides an understanding of market trends. Furthermore, the report takes into consideration several factors driving the market growth in recent times.


REPORT SCOPE & SEGMENTATION


























































  ATTRIBUTE



  DETAILS



Study Period



2019 – 2030



Base Year



2022



Estimated Year



2023



Forecast Period



2023 – 2030



Historical Period



2019 – 2021



Growth Rate  



CAGR of 18.4% from 2023 to 2030



Unit



Value (USD Billion)



Segmentation



By Deployment, Banking Type, End-user, and Region



By Deployment




  • SaaS/Hosted

  • Licensed



By Banking Type




  • Large Banks (Greater than USD 30 Billion in Assets)

  • Midsize Banks (USD 10 billion to USD 30 Billion in Assets)

  • Small Banks (USD 5 billion to USD 10 Billion in Assets)

  • Community Banks (Less than USD 5 Billion in Assets)

  • Credit Unions



By End-user




  • Retail Banking

  • Treasury

  • Corporate Banking

  • Wealth Management



By Region




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

    • U.S. (By Banking Type)

    • Canada (By Banking Type)

    • Mexico (By Banking Type)



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

    • U.K. (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, 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, 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 Middle East & Africa



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

    • Brazil (By Banking Type)

    • Argentina (By Banking Type)

    • Rest of South America





Frequently Asked Questions

According to Fortune Business Insights, the global market is projected to reach USD 47.37 billion by 2030.

In 2022, the market stood at USD 12.51 billion.

The market is projected to grow at a CAGR of 18.4% during the forecast period (2023-2030).

By banking type, the large banks segment is likely to lead the market.

The rising adoption of cloud-based solutions among enterprises is the key factor driving the market growth.

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

North America is expected to hold the highest market share.

By banking type, community banks segment is expected to grow with the highest CAGR over the projected period.

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