"Smart Strategies, Giving Speed to your Growth Trajectory"
The global core banking software market size was USD 9.40 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with core banking software witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a significant growth of 15.1% in 2020 as compared to the average year-on-year growth during 2016-2019. The market is projected to grow from USD 10.84 billion in 2021 to USD 34.48 billion in 2028 at a CAGR of 18.0% in the 2021-2028 period. The rise in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over.
Core banking software (CBS) is a back-end solution that is deployed by banking organizations to maintain the flow of banking activities, such as payments, transactions, post 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 in performing multiple bank-related activities, such as loan processes, money transactions, debts, and access to their respective accounts. The increasing investments by key players in fintech technologies, banking software, and others are likely to drive the growth of the market. In addition, the surging need for managing customer accounts from a single server is also set to boost the market growth.
Companies Plan to Develop Advanced Banking Systems 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 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.
Request a Free sample to learn more about this report.
Increasing Adoption of Artificial Intelligence-based Banking Systems is a Current Trend
The rising adoption of technologies such as artificial intelligence (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. These 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 for the bank.
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 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 opportunities 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 the 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.
Information Security and Privacy Concerns Associated with Banking System May Hinder Growth
With the soaring 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), data breaches at many financial institutions and banks increased by over 1,000% in the 2017-2018 period. In March 2021, the US-based Flagstar Bancorp faced a data breach incident and lost employees’ and customers’ private data such as email ids, social security numbers, phone numbers, and more. The hacker exploited the company's data transfer file software to gain access to the entry. Thus, with growing advancements, the concern for data safety is increasing.
SaaS/Hosted Segment to Dominate Backed by the Need to Improve Banking Activities
Based on deployment, the market is divided into SaaS/hosted and licensed. Among these, the SaaS/hosted segment is estimated to hold the largest 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.
To know how our report can help streamline your business, Speak to Analyst
Increasing Fintech Investments by Large Banks to Aid Growth of the Segment
Based on banking type, the market is 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 heightened 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 also likely to fuel the growth of the market.
Corporate Banks Segment to Gain Traction from Increasing Adoption of Advanced Banking Systems
Based on 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 investment modules. Besides, the rising implementation of such banking solutions across retail banking and treasury is expected to propel the growth of the segment.
North America Core Banking Software Market Size, 2020 (USD Billion)
To get more information on the regional analysis of this market, Request a Free sample
Geographically, the 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 core banking software market share in terms of revenue. The widespread 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, 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 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 businesses and mobile applications in the banking sector. In addition to that, 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 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 the MEA.
To know how our report can help streamline your business, Speak to Analyst
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.
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 fintech 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 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.
An Infographic Representation of Core Banking Software Market
To get information on various segments, share your queries with us
The global core banking software market research report provides a detailed analysis of the market and research services and focuses on key aspects such as leading companies, product types, and leading applications of the product. In its research methodology, the report identifies revenue sources 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. In addition to the aforementioned factors, it encompasses several factors that have contributed to the growth of the advanced market over recent years.
Value (USD Billion)
Deployment; Banking Type; End-user and Region
By Banking Type
Fortune Business Insights says that the market value stood at USD 9.40 billion in 2020.
By 2028, the market size is expected to reach USD 34.48 billion.
The market is expected to grow at a CAGR of 18.0% in the forecast period (2021-2028).
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.
“We are happy with the professionalism of your in-house research team as well as the quality of your research reports. Looking forward to work together on similar projects”- One of the Leading Food Companies in Germany
“We appreciate the teamwork and efficiency for such an exhaustive and comprehensive report. The data offered to us was exactly what we were looking for. Thank you!”- Intuitive Surgical
“I recommend Fortune Business Insights for their honesty and flexibility. Not only that they were very responsive and dealt with all my questions very quickly but they also responded honestly and flexibly to the detailed requests from us in preparing the research report. We value them as a research company worthy of building long-term relationships.”- Major Food Company in Japan
“Well done Fortune Business Insights! The report covered all the points and was very detailed. Looking forward to work together in the future”- Ziering Medical
“It has been a delightful experience working with you guys. Thank you Fortune Business Insights for your efforts and prompt response”- Major Manufacturer of Precision Machine Parts in India
“I had a great experience working with Fortune Business Insights. The report was very accurate and as per my requirements. Very satisfied with the overall report as it has helped me to build strategies for my business”- Hewlett-Packard
“This is regarding the recent report I bought from Fortune Business insights. Remarkable job and great efforts by your research team. I would also like to thank the back end team for offering a continuous support and stitching together a report that is so comprehensive and exhaustive”- Global Management Consulting Firm
“Please pass on our sincere thanks to the whole team at Fortune Business Insights. This is a very good piece of work and will be very helpful to us going forward. We know where we will be getting business intelligence from in the future.”- UK-based Start-up in the Medical Devices Sector
“Thank you for sending the market report and data. It looks quite comprehensive and the data is exactly what I was looking for. I appreciate the timeliness and responsiveness of you and your team.”- One of the Largest Companies in the Defence Industry