The global retail core banking solution market is expected to witness significant growth over the forecast period. The growing preference for digital banking services, and subsequently, the strong emphasis retail banks are putting on digitization are expected to drive the growth of the market over the forecast period. In an article published in June 2020, McKinsey stated that the banking preferences being pursued by customers are evolving rapidly and that 15%-20% of the customers surveyed in the U.S., Spain, and Italy are expected to increase the use of digital channels once the crisis posed by the outbreak of the COVID-19 pandemic has passed. As a result, retail banks are aggressively looking forward to implementing core banking solutions so that they are in a better position to offer enhanced solutions, ranging from credit and lending to payments and deposits, to their customers. The proliferation of smartphones is also emerging as one of the major factors driving the growth of the market because smartphones are allowing banking customers to leverage the core banking solutions offered by retail banks.
Several retail banks are striking partnerships with retail core banking solution providers. For instance, in September 2020, BlueShore, a personal loan service provider, extended its deal with Temenos Headquarters SA, a retail core banking solution provider. The extended deal envisaged BlueShore implementing additional functionality for Temenos Headquarters SA Transact and rolling out the enhancements across its SME, non-profit organizations, and retail business lines. BlueShore was looking forward to leveraging the agile and fully integrated architecture of Temenos Headquarters SA to roll out new services and functionality quickly.
The changes being implemented in retail banking norms across various countries are also playing a vital role in driving the demand for core banking solutions. Retail banks are increasingly opting for core banking software to ensure adequate compliance in line with the changing regulatory landscape worldwide. For instance, Canada Federal Government’s 2019 budget included new amendments to its financial sector statutes by introducing changes to the Bank of Canada Act, and the Canada Deposit Insurance Corporation Act, among others.
The venture capital funds retail core banking software companies are raising are equally creating new opportunities for the growth of the market. The companies are utilizing these funds in enhancing the product offerings and cementing their market position. For instance, in December 2020, Modularbank, a retail core banking platform provider, raised USD 4.63 million in a seed funding round led by BlackFin Capital Partners and Karma Ventures. The company envisaged utilizing these funds for setting up its commercial operations, such as establishing an office in the U.K., and expanding its operations across France and other Southern European countries. At present, the company has a staff of 35 across Europe, and the funding would also be utilized to increase the headcount to 100 by the end of 2021.
The key players in the retail core banking solution market include Temenos Headquarters SA, Oracle, Fiserv, Inc., TATA Consultancy Services Limited, Finastra, Fidelity National Information Services Inc., SAP SE, Asseco Poland SA, and others. These market players are pursuing various strategies, such as strategic collaborations, geographic expansion, mergers & acquisitions, and new product development, as part of the efforts to further expand their global market presence. For instance, in June 2021, Temenos Headquarters SA announced a partnership with Huawei Technologies Co., Ltd, an information and communications technology provider. The partnership envisaged Temenos Headquarters SA’ cloud-native core banking solution being offered on Huawei Public Cloud. The partnership would typically allow Temenos Headquarters SA to cater to the growing demand for cloud-based core banking modules from various banking institutions in the wake of the outbreak of the COVID-19 pandemic.
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