Core Banking Software Market Size, Share & Trends Report

Core Banking Software Market Size, Share & Trends Analysis Report By Solution (Deposits, Loans, Enterprise Customer Solutions), By Service, By Deployment, By End Use, By Region, And Segment Forecasts, 2021 - 2028

  • Published Date: Jul, 2021
  • Base Year for Estimate: 2020
  • Report ID: 978-1-68038-496-3
  • Format: Electronic (PDF)
  • Historical Data: 2016 - 2019
  • Number of Pages: 136

Report Overview

The global core banking software market size was valued at USD 9.84 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 7.8% from 2021 to 2028. The promising growth prospects of the market can be attributed to growing customer demand for advanced banking technologies. Owing to the emergence of several next-generation banks and the constantly lowering switching barriers, the banking industry has become intensely competitive. These new players are using digital technologies, such as core banking software, to attract new customers by offering quicker services at much lower costs than traditional banks.

U.S. core banking software market size, by solution, 2018 - 2028 (USD Billion)

Core banking is a centralized online real-time exchange banking service. Numerous banks across the globe are focusing on adopting core banking solutions and services as these solutions allow customers to perform basic transactions and access their bank accounts from any of the member branch offices. According to a McKinsey survey held in May 2019, approximately 65% of the surveyed banks were discovering the future of next-generation core banking platforms. Furthermore, around 70% of the surveyed banks were reviewing for their core banking platforms.

Core banking software systems are increasingly becoming the backbone of modern banks, undertaking tasks such as the management and creation of accounts, transactions, journal entries, balances, along with the storage of receipts, client data, and other reporting tools. A core banking software is largely designed based on a composable architecture connected by APIs, which allow banks to decouple client data, distribution channels, and products. Furthermore, the agile architecture enables banks to make rapid changes in core banking software while offering continuous digital experience to customers. Various banking activities, such as payment processing, onboarding, KYC services, and card issuing, are now integrated into the core banking software.

Core banking software allows banks to seamlessly merge back-office data and self-service operations. Technologies, such as artificial intelligence, blockchain, big data, and mobility are evolving rapidly, disrupting the prevalent business models of financial institutions and banks. Advancements in core banking technology are raising staff efficiency and reducing manual work significantly. Furthermore, banks are widely adopting innovative technologies to attract new-age customers and reap better growth prospects from cutting edge technologies such as blockchain data analytics and machine learning. Adoption of these technologies is also allowing banks and financial institutions to future proof their offerings and services.

However, the lack of awareness among businesses about modern banking technologies is expected to hamper the market growth. In addition, the lack of necessary infrastructure in rural areas of developing countries is further expected to hamper the market growth. Numerous banks and financial institutions across the globe are focusing on adopting core banking solutions to drive their business growth prospects. However, the lack of appropriate software selection methodology could hamper the buying decision.

COVID-19 Impact Analysis

The outbreak of the COVID-19 pandemic is expected to adversely impact the market. The pandemic has led to a significant repositioning in the global financial market as the financial industry is experiencing sudden changes in interest rates and delayed lease payments. In these times, the challenge for many banks and financial institutions is operationalizing the variations in the complete credit management scenario. Numerous core banking software providers are focusing on launching AI-integrated models for banks. For instance, in April 2020, Temenos Group introduced Explainable AI (XAI) models to allow credit unions and banks to rapidly provide loans to small & medium enterprises that have experienced cash flow disruption due to the COVID-19 outbreak.

Solution Insights

The enterprise customer solutions segment led the market and accounted for more than 47.0% share of the global revenue in 2020. Enterprise customer solutions seamlessly integrate with CRM and ERP 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. These solutions help banks in expanding their reach and improving their functioning while reducing operational costs and offering a sole interface to control banking activities.

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 in improving various finance activities, such as servicing loans, calculating interests, opening new floating accounts, and processing deposits and withdrawals. All the core banking solutions integrated bank branches are accessible to customers in real-time.

Service Insights

The professional service segment dominated the market and accounted for more than a 77.0% share of the global revenue in 2020. The segment growth 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. 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 led the core banking software market and accounted for more than 60.0% share of the global revenue in 2020. When building an on-premise system, businesses assume the full responsibility of integration and any IT-related and security issues. Companies with legacy platforms are partnering with IT professionals for data recovery process and to reduce security concerns and operational costs. This, as a result, is expected to drive the on-premise segment growth over the forecast period.

The cloud segment is anticipated to register the highest growth over the forecast period. According to the 2018 Core Provider Survey, financial institutions and banks are expected to adapt to cloud-based core banking systems, with 21% saying they would not consider it, 50% saying they were unsure, and 29% saying they would consider it. Businesses are focusing on adopting cloud-based solutions as any financial institution or bank relying on an on-premise infrastructure cannot compete against more innovative digital opponents. Implementing cloud technology automates workflows and operations, resulting in increased efficiency, cost savings, and security.

End-use Insights

The banks segment dominated the market and accounted for more than 55.0% share of the global revenue in 2020. The banks segment growth can be attributed to the vast advancements in information technology and the internet connectivity across the globe. These technologies help banks in reducing manual work and increasing 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.

Europe core banking software market share, by end use, 2020 (%)

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 end use segment is expected to witness significant growth over the forecast period. Financial institutions are widely adopting this software to prevent theft and fraud with real-time banking facilities.

Regional Insights

North America dominated the market and accounted for over 28.0% share of global revenue in 2020. The large-scale adoption of advanced core banking software by leading banks in the region is expected to fuel the growth. Furthermore, small and medium enterprises in the region are implementing these solutions for the effective flow of finance activities. Also, the rapidly increasing sizes of enterprises and the growing application area of these solutions are further anticipated to support the growth of the regional market over the forecast period.

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, 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 in nature and is marked by stiff competition from prominent players operating in this industry. Joint ventures, partnership agreements, mergers and acquisitions, product innovations, geographical extensions, 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. Businesses are partnering with digital banking platform vendors to provide credit unions and banks with the flexibility and speed essential in the fintech industry.

Core banking solution providers are focusing on developing ready-to-use financial solutions that have a strategic advantage over other players. Numerous vendors are delivering their digital platforms and financial solutions to various banks and use their feedback to improve solutions capabilities. 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

Report Attribute

Details

Market size in 2021

USD 10.33 billion

Revenue forecast in 2028

USD 17.48 billion

Growth rate

CAGR of 7.8% from 2021 to 2028

Base year of estimation

2020

Historical data

2016 - 2019

Forecast period

2021 - 2028

Quantitative units

Revenue in USD million and CAGR from 2021 to 2028

Report coverage

Revenue forecast, company market share analysis, competitive landscape, growth factors, and trends

Segments covered

Solution, service, deployment, end use, region

Regional scope

North America; Europe; Asia Pacific; Latin America; MEA

Country scope

U.S.; Canada; Germany; U.K.; China; India; Japan; Brazil

Key companies profiled

Capgemini; Finastra; FIS; Fiserv, Inc.; HCL Technologies Limited; Infosys Limited; Jack Henry & Associates, Inc.; Oracle Corporation; Temenos Group; and Unisys

Customization scope

Free report customization (equivalent to up to 8 analysts working days) with purchase. Addition or alteration to country, regional & segment scope

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Avail customized purchase options to meet your exact research needs. Explore purchase options


Segments Covered in the Report

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 2016 to 2028. 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, 2016 - 2028)

    • Deposits

    • Loans

    • Enterprise Customer Solutions

    • Others

  • Service Outlook (Revenue, USD Million, 2016 - 2028)

    • Professional Service

    • Managed Service

  • Deployment Outlook (Revenue, USD Million, 2016 - 2028)

    • Cloud

    • On-premise

  • End Use Outlook (Revenue, USD Million, 2016 - 2028)

    • Banks

    • Financial Institutions

    • Others

  • Regional Outlook (Revenue, USD Million, 2016 - 2028)

    • North America

      • U.S.

      • Canada

    • Europe

      • Germany

      • U.K.

    • Asia Pacific

      • China

      • India

      • Japan

    • Latin America

      • Brazil

    • Middle East & Africa

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