Core Banking Software Market Share, Growth & Forecast [2031]

Report Description

The global core banking software market size was valued at USD 11.76 billion in 2022 and is anticipated to reach a value of USD 22.17 billion in 2031, expanding at a CAGR of 7.3% over the forecast period, 2023-2031. The growth of the market is attributed to the surging demand for advanced banking technologies among the targeted population base.

The back-end software that is used for the processing of day-to-day transactions performed by the bank and broadcast updates to accounts along with several other financial records is known as core banking software. Intense competition is occurring in the banking industry due to the lowering of switching barriers and the arrival of several next-generation banks.

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Quick services are provided by the key players of the market at a very low price to attract new customers. Core banking software enables an individual to exchange banking services online in real-time. These solutions allow a customer to access their account and carry out primary transactions from any branch office.

The core banking software systems are rapidly becoming the backbone of modern banks as they look over various tasks such as journal entries, creation & management of accounts, balances, transactions, and others. Such software uses an agile architecture that allows the bank to make quick fixes and changes in the software without interrupting the customer’s digital experience.

The recently developed core banking software are integrated with several banking activities including KYC services, payment processing, card issuing, onboarding, among others. These software enables banks to effortlessly merge self-service operations and back-office data.

The established business models used by various banks and financial institutions are being disrupted due to the rapid evolvement of advanced technologies such as big data, artificial intelligence, mobility, and blockchain among the others. Such technological advancements reduce the manual work and increase the efficiency of the staff.

The COVID-19 pandemic had a negative impact on the global core banking software market. The worldwide financial market faced a significant repositioning due to delayed lease payments and the occurrence of sudden changes in the interest rates. This pandemic created several challenges for the banks and financial institutions among which the major one is the operationalization of variations in the complete credit management.

Market Trends, Drivers, Restraints, and Opportunities

• The rising adoption of SaaS-based or cloud-based banking platforms is anticipated to boost the market growth over the forecast period.

• Increasing demand for digital banking services and the growing insistence of smart phones are expected to fuel the market expansion in the coming years.

• Absence of awareness among businesses regarding recent banking technology is a major factor restraining the market growth.

• Lack of availability of switchable methodology for software selection and lack of required infrastructure are key challenges hampering the market growth during the forecast period.

• Technological advancements in core banking along with their adoption by the banking sector are estimated to create key opportunities for the market growth.

Scope of the Report

The report on the global core banking software market includes an assessment of the market, trends, and segments. Overview and dynamics have also been included in the report.

Market Segment Insights

Enterprise customer solutions segment is expected to grow at a considerable rate

On the basis of solutions, the core banking software market is divided into enterprise customer solutions, loans, deposits, and others. The enterprise customer solutions segment led the market in 2020 and is expected to grow at a considerable rate as it provides several benefits to the banks and financial institutions.

Enterprise customer solutions enable seamless integration of customer information with Enterprise resource planning (ERP), Customer Relationship Management (CRM), and administrative management tools using the central database of a bank.

These solutions help in the improvement of their functions at reduced operational costs. These solutions also enable the establishment of inner-connectivity among the branches of a common bank or financial institution.

Managed service segment is anticipated to exhibit a high growth

Based on services, the market is bifurcated into managed service and professional service. The professional services segment led the market in 2020 attributed to the rising requirement for support at every stage of the process of software deployment.

These stages include integration, consultation & pre-implementation, and project management. However, the managed service segment is anticipated to exhibit a high growth as it provides maintenance capabilities and support for deep infrastructure.

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Cloud segment is estimated to register a high growth

On the basis of deployments, the core banking software market is bifurcated into on-premise and cloud. The on-premise segment held a major share of the market in 2020 due to its huge adoption as it takes the complete responsibility of integration of the software and solving any issue related to security. However, the cloud segment is estimated to register a high growth as they help various banks and financial institutes to battle against better innovative digital competitors.

Banks segment is anticipated to dominate the market

Based on end-users, the market is segmented into financial institutions, banks, and others. The bank segment dominated the market in 2020 and is anticipated to continue its dominance over the forecast period attributed to extensive advancements in internet connectivity and information technology worldwide.

Several banks are also diverting their focus towards the implementation of customized applications for core banking. However, financial institutions are anticipated to register a significant owing to the wide adoption of this software to avoid fraud and theft occurring in real-time banking facilities.

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Asia Pacific market is anticipated to witness a rapid growth

In terms of regions, the core banking software market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa.

North America dominated the market in 2020 in terms of revenue share owing to the huge adoption of these software by the major banks present in the region. Adoption of such software by small & medium enterprises to ensure effective flow of financial activities is also a major factor that contributed to the growth of the regional market.

On the other hand, the market in Asia Pacific is anticipated to witness a rapid growth due to the growing adoption of web-based and mobile-based business applications in the sector of banking.