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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, 2022-2029

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

 

KEY MARKET INSIGHTS

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The global core banking software market size was valued at USD 10.80 billion in 2021. The market is expected to grow from USD 12.51 billion in 2022 to USD 40.67 billion by 2029, exhibiting a CAGR of 18.3% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with experiencing lower-than-anticipated demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a decline of 14.9% in 2020 compared to 2019.


In the scope, we have considered 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, post updates to user accounts, 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 money transactions, loan processes, debts, 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 managing customer accounts from a single server is also set to boost the core banking software market growth.


COVID-19 IMPACT


Rising Focus Toward Development of Advanced Banking Systems amid COVID-19 Pandemic to Bolster Market Growth


The COVID-19 pandemic has significantly 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 focus 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 CBS 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. These technologies help in increasing connectivity and provide advanced security methods in banks & financial institutions.


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 based on core technologies, such as AI and others. For instance, in January 2022, Temenos AG launched its Buy-Now-Pay-Later (BNPL) banking service. This 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 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 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 CBS in the forthcoming years. Also, the rising usage of Big Data, Payment as a Service (PaaS), cybersecurity, and remote banking solutions, is expected to boost the market growth during the forecast period.


RESTRAINING FACTORS


Information Security and Privacy Concerns Associated with Banking System May Hinder 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. Moreover, not all core banking software provides 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.


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 deployment is estimated to hold the largest core banking software market share in the near future. 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.


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 Banking System


Based on banking type, the market is segregated into large banks, midsize banks, small banks, community banks, and credit unions. Large banks are 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 are expected to fuel the growth of this segment.


Community banks are 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 also likely to fuel the market growth.


By End-user Analysis


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


Based on end-user, the market is divided into retail banking, treasury, corporate banking, and wealth management. The corporate banking sector 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 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, 2021 (USD Billion)

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The global market scope is classified across five regions, North America, Europe, Asia Pacific, 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 banks 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. 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 due to a significant number of core banking software 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.


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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, among others, 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. Also, 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. For instance,


September 2021: SAP SE announced the launch of “Fioneer” which is a joint venture of the financial service industry between Dediq GmbH and SAP SE. SAP Fioneer is an addition to SAP's financial services software. It provides new solutions to assist its consumers in the constantly evolving banking and insurance industries.


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


List of Key Companies Profiled:



  • Oracle Corporation (U.S.)

  • SAP SE (Germany)

  • Tata Consultancy Services Limited (India)

  • Capital Banking Solutions (U.S.)

  • EdgeVerve Systems Limited (India)

  • Finastra International Limited (U.K.)

  • Fidelity National Information Services, Inc. (U.S.)

  • Fiserv, Inc. (U.S.)

  • Mambu GmbH (Germany)

  • Temenos AG (Switzerland)


KEY INDUSTRY DEVELOPMENTS



  • April 2021– SAP SE and Dediq GmbH entered into a strategic partnership for the financial service industry. The two firms will jointly extend SAP's financial services portfolio with a considerable investment in new solutions. This partnership enables innovation in core insurance, CBS, and FSI-specific finance solutions.

  • 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 market research report provides a comprehensive analysis of the market. It focuses on key aspects such as prominent companies and leading applications of the product. Besides this, the report highlights key industry developments and offers insights into the market trends. In addition to the above-mentioned factors, the report includes several factors that have contributed to the market growth in recent years.


REPORT SCOPE & SEGMENTATION

































































  ATTRIBUTE



  DETAILS


 

Study Period



2018–2029


 

Base Year



2021


 

Estimated Year



2022


 

Forecast Period



2022–2029


 

Historical Period



2018–2020


 

Unit



Value (USD billion)


 

Segmentation



By Deployment, Banking Type, End-user, Region


 

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, 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 the 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

Fortune Business Insights says that the market was valued at USD 10.80 billion in 2021.

Fortune Business Insights says that the market is expected to reach USD 40.67 billion in 2029.

Growth of 18.3% CAGR will be observed in the market during the forecast period (2022-2029)

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 likely to drive the market.

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

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

The revenue of the market in North America in 2021 was USD 4.90 billion.

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