The global third-party banking software market, according to Grand View Research, is expected to progress at a high CAGR of 7% over the forecast period. The primary factor accounting for global market growth is the necessity to increase productivity and operational efficiency.
Banking software has been observing the growth in cloud-based techniques usage which in turn is expected to enhance the overall industry in the future. Banking software caters to the need for managing processes that deal with money.
Over the decades, monetary transactions and bookkeeping were carried using the conventional manual process. Increased transaction amount on account of rising account holders has resulted in computerized accounting which is expected to establish as a primary market driver over the forecast period.
The banking sector is considered as the pillar of the country’s economy and is an indicator of the socio-economic strength of the nation. Globalization has led to an increasing demand for sophisticated software that is risk-free, compliant, and data-driven.
Retail Banks are looking forward to transforming themselves to achieve customer satisfaction. Such transformation can be attained by implementing easy to use applications which are expected to drive further global industry growth in the future.
Trends have shown that banking institutions have developed a tendency of concentrating on core competencies and carry out activities with the help of dedicated third-party applications. Global banking service software market aid organizations to use financial data, optimize operational costs, and discover new growth opportunities.
Integration within multiple banking organizations is expected to challenge the growth of this market over the forecast period. Lack of efficient professionals is another concern for this industry which is projected to narrow down the overall growth in the future.
An increasing amount of fraud is another concerning factor that is pulling down the market growth. Applications without any robust security are easy to penetrate leading to malpractices and fraudulent transactions.
These activities not only affect the customer’s reputation but are also a threat to the nation’s economy. An increase in financial transaction magnitude has resulted in automating processes with the help of software applications.
Moreover, organizations concentrate on risk & compliance, audit, and financial analytics. All these factors are expected to contribute significantly towards global software industry growth over the forecast period.
This software market has given rise to supporting service sectors which include financial analytics. The analytics industry in the field of finance is estimated to observe considerable growth over the forecast period on account of its important role in investigating the daily monetary trade.
Further, banking applications presented by market players consist of risk management, business intelligence, information security, training, and consulting solutions. Software suites are segmented by application usage which includes retail, ATM, internet, and SMS.
The increase in mobile phone consumers has significantly driven the market for mobile banking software. Vendors have been working on developing application packages that provide safe and secure financial services that are expected to reduce fraud and malpractices.
Applications undergo continuous improvement and. Therefore, it becomes essential for the users to get well acquainted with the current technology. An estimated increase in cloud storage demand provides excellent opportunities for banks to adopt third-party applications.
The development of cloud computing is expected to have a long-lasting effect on the global market. North America has been the largest third-party banking software market and is projected to show its dominance over the forecast period on account of the wider banking sector and high concentration of online banking.
Regional demand is followed by Asia-Pacific mainly as a result of the government-run banking industry. Significant demand is observed in emerging economies including India and China on account of the emergence of private and rural banking.
Regional demand is followed by Europe, South America, and Africa. These regions are expected to show steady growth over the forecast period. Key players in the global market are Microsoft, IBM, TCS, Infosys, Oracle, TIBCO and SAP, Cap Gemini, and Accenture.
Other vendors include NetSuite Inc., Deltek Inc. COA Solutions, Epicor Software Corp., Exact Software, Infor, Lawson Software Inc, and Sage Group. Third-party vendors engage in providing complete IT solutions which include banking applications as well.
This is aiding them to integrate multiple departments and aids in maintenance. After-sales service includes quick turn-around in troubleshooting errors, bugs, and making necessary upgrades if any.
Large players are trying to acquire small players in the industry to increase their business and enter into untapped markets. Mergers and acquisitions by multinationals are expected to remain as the primary strategy for increasing position in the global third-party banking software market.
In 2015, Capgemini, an IT consulting company acquired I-Gate to improve its customer database in North America. I Gate was a dominant player in providing business solutions in the U.S.
Major potential customers include ANZ, Citi Bank, Standard & Charted, DBS, Emirates Bank, and Deutsche Bank. Infosys developed a software named as Finacle for core banking. It is used by banks across approximately 80 countries serving around 450 million customers.
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