Core Banking Software Market Size, Share & Trends Analysis Report By Solution (Deposits, Loans), By Service (Professional Service, Managed Service), By Deployment, By End Use, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global core banking software market size was valued at USD 10.89 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 9.3% from 2023 to 2030. The growth can be attributed to the increasing customer demand for advanced banking technologies. Moreover, the increasing demand for a digital banking experience from Gen Z and millennials is transforming how the banking industry operates. The increasing consumer demand to access banking services from digital channels has led to a surge in advanced banking technologies. These factors are expected to drive the growth prospects of the market over the forecast period.

The increasing demand for effectively managing customer banking accounts from a single platform is further expected to drive market growth over the forecast period. Core banking solutions empower bank employees with an accurate insight into the bank account through an end-to-end platform. This platform spans business lines and combines capabilities such as customer onboarding, Customer Relationship Management (CRM), account opening, loan origination, workflow, credit analysis, deposit accounts, instant reporting, and enterprise content management capabilities. Furthermore, core banking solutions integrate the bank's transactional and core systems while replacing manual processes and point solutions.

Banks across the globe are focusing on adopting Artificial Intelligence (AI)-integrated core banking solutions to extract usable insights of customers in real-time. These solutions are enabling banks to achieve higher operational efficiencies and analyze transactions more effectively, detect fraudulent activities, mitigate risks, and understand and predict customer behavior. This enhanced ability to analyze complex data sets enables banks to make informed decisions for their banking products, operations, and services.

Core banking solutions work as a back-end office system. Banks are focusing on adopting core banking solutions to effectively manage all the banking transactions, provide customers with better services, and empower the customer. Moreover, the integration of such advanced technology enables bank customers to have an efficient and hassle-free experience while accessing bank services.

However, the lack of awareness about core banking technology among several banks and financial institutions could hamper the market growth. Moreover, the various privacy concerns associated with banking systems are further anticipated to hinder the market growth over the forecast period. With the increasing popularity of core banking technology, security concerns about application vulnerabilities, unencrypted data, information loss, and mobile malware are also increasing. These concerns can impact the revenues of corporate banks, credit unions, and financial institutions.

COVID-19 Impact Analysis

The COVID-19 pandemic adversely affected the market growth. Numerous industries have faced significant ramifications of the pandemic, leading to a global economic slowdown. This presents the need for banks across the globe to operationalize their programs. Many loan accounting, deposit accounting, and core banking systems are not set up for this type of operational flexibility at scale. As a result, banks and financial institutions across the globe are focusing on business continuity planning. They are primarily focusing on continuing branch distribution and customer service operations without any interruption.

Solution Insights

The enterprise customer solutions segment dominated the market in 2022 and accounted for more than 46.0% share of the global revenue. Enterprise customer solutions seamlessly integrate with CRM and ERP systems and administrate management tools and customer information through the central database of a bank. This helps banks and financial institutions achieve economies of scale by data integration for multiple purposes such as CRM, cross-selling, and regulatory reporting. Moreover, these solutions help banks identify key business drivers and make decisions to improve customer loyalty and satisfaction.

Core banking solutions allow inter-connectivity between branches of the same financial institution and bank and facilitate the management of loan, deposit, and credit processing. These solutions are integrated with a back-end system, which efficiently processes various banking transactions across the multiple branches of a bank. Furthermore, these solutions help customers improve various financial activities, such as servicing loans, calculating interests, opening new floating accounts, and processing deposits and withdrawals. Core banking solutions enable banks to monitor end-to-end customer journeys and effectively create a 360-degree view of each customer.

Service Insights

The professional service segment dominated the market in 2022 and accounted for more than a 76.0% share of the global revenue. Banks across the globe are focusing on adopting open-system architecture and platform-independent and cutting-edge technology. Professional service providers help banks smoothly integrate these technologies with existing and future operational systems. The growth of the professional service segment can be attributed to the increasing need for support at every stage of the software deployment process, including the pre-implementation of scope and consulting, project management, and integration. Maintaining a full-time IT department can be expensive, inefficient, and time-consuming for small- to medium-sized businesses. Professional service providers offer on-demand support and resources at affordable IT service costs to small and medium enterprises, thereby fueling the segment growth.

The managed service segment is anticipated to register the highest growth over the forecast period. Banks and financial institutions across the globe are focusing on integrating their systems using APIs to reduce upgrade and maintenance costs, thereby creating growth opportunities for managed services segment. In a competitive environment, banks and financial institutions seek more value from IT investments. Moreover, core banking applications form the backbone of the IT landscape in financial institutions and banks and are required to be highly functional and agile to respond to changes. Managed service providers offer deep infrastructure support and maintenance capabilities to such highly functional IT landscapes, thereby creating growth opportunities for the segment.

Deployment Insights

The on-premise segment dominated the market in 2022 and accounted for more than 59.0% share of the global revenue. When building an on-premise system, businesses assume the full responsibility of integration and any IT-related and security issues. Companies with legacy platforms often partner with IT professionals for the data recovery process and to reduce security concerns and operational costs.

The cloud segment is anticipated to register the highest growth over the forecast period. Financial institutions and banks with on-premise infrastructure are focusing on adopting cloud-based solutions to compete against more innovative digital opponents. Cloud technology helps automate workflows and operations, resulting in increased efficiency, cost savings, and security. Cloud-based core banking solutions are flexible and easy to expand or reduce on-demand; thereby meeting the IT requirements of the target organization.

End-use Insights

The banks segment dominated the market in 2022 and accounted for more than 56.0% share of the global revenue. The growth of the segment can be attributed to the vast advancements in information technology and the growing network of the internet across the globe. These technologies help banks reduce manual work and increase operational efficiency. The core banking software is installed at multiple bank branches and then interconnected by computer networks based on satellite, telephones, and the internet. Benefits offered by core banking solutions, including increased efficiency and accessibility, reduced additional costs, and increased system flexibility, are expected to drive their adoption across banks.

Network technology and core banking solutions allow banks to centralize record-keeping and permit access from any location. Numerous banks across the globe are focusing on implementing custom applications for core banking. The financial institutions segment is expected to witness significant growth over the forecast period. Financial institutions are widely adopting core banking software to prevent theft and fraud with real-time banking facilities. The rising rate of adoption can also be attributed to the need to fill the gap between customer expectations and the way traditional banks operate. These factors are expected to create growth opportunities for the financial institutions segment.

Regional Insights

North America dominated the market for core banking software in 2022 and accounted for over 27.0% share of global revenue. The large-scale adoption of advanced core banking software by leading banks in the region is expected to fuel the growth of the regional market. Furthermore, small & medium enterprises in the region are implementing these solutions for the effective flow of finance activities. The rapidly increasing sizes of enterprises and the growing areas of application of these solutions are further anticipated to support the growth of the regional market over the forecast period. The region has witnessed increasing demand for next-generation cloud-based core banking systems in recent years.

Asia Pacific is expected to emerge as the fastest-growing regional market over the forecast period. Market growth in Asia Pacific is likely to be primarily driven by the increasing adoption of mobile and web-based business applications in the banking sector. Furthermore, numerous banks in the region are focusing on adopting core banking systems as these systems help them handle a high volume of transactions and banking functions without interruption. Furthermore, the growing economies of Asia Pacific countries, such as China and India, are expected to propel the adoption of core banking software in the region. An increasing focus on R&D activities and innovations in technology across these countries is further expected to fuel the growth of the regional market.

Key Companies & Market Share Insights

The market is moderately fragmented and marked by stiff competition from prominent players operating in this industry. Joint ventures, partnership agreements, mergers and acquisitions, product innovations, geographical expansions, and increased focus on R&D activities are some of the key strategies adopted by prominent players to ensure long-term sustenance in the market. For instance, in October 2020, Finastra launched Fusion Payments To Go, a pre-packaged payment solution, to implement domestic and cross-border payment services in small and medium-sized banks across the U.S., Europe, and South Africa. This solution provides better functionalities and operating rules to support clearing and settlement mechanisms, improve customer experience, and deliver revenue growth.

Core banking solution providers are focusing on developing ready-to-use financial solutions that have a strategic advantage over other players. Vendors are focusing on using client feedback to improve the capabilities of their digital platforms and financial solutions. For banks and financial institutions concerned about the limitations of their core architecture platforms, vendors are offering solutions based on the clients’ professional approach. Some of the prominent players operating in the global core banking software market are:

• Capgemini

• Finastra

• FIS

• Fiserv, Inc.

• HCL Technologies Limited

• Infosys Limited

• Jack Henry & Associates, Inc.

• Oracle Corporation

• Temenos Group

• Unisys

Core Banking Software Market Report Scope

Global Core Banking Software Market Segmentation

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global core banking software market report based on solution, service, deployment, end-use, and region:

• Solution Outlook (Revenue, USD Million, 2017 - 2030)

  • Deposits

  • Loans

  • Enterprise Customer Solutions

  • Others

• Service Outlook (Revenue, USD Million, 2017 - 2030)

  • Professional Service

  • Managed Service

• Deployment Outlook (Revenue, USD Million, 2017 - 2030)

  • Cloud

  • On-premise

• End-use Outlook (Revenue, USD Million, 2017 - 2030)

  • Banks

  • Financial Institutions

  • Others

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • U.K.

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

  • Middle East & Africa