Core Banking Software Market Expected to Reach $49.7 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Core Banking Software Market By Component (Solution and Service), By Deployment Model (On-premise and Cloud) and By End User (Banks, Financial Institutions, and Others): Global Opportunity Analysis and Industry Forecast, 2023–2032 ." The core banking software market was valued at $10.2 billion in 2022, and is estimated to reach $49.7 billion by 2032, growing at a CAGR of 17.6% from 2023 to 2032.

The term core banking (centralized online real-time exchange) refers to basic banking services. It is a back-end infrastructure that handles financial transactions from various branches on a single platform. Core banking software (CBS) is a centralized system within a bank that is responsible for ensuring uniform work processes through automated front-end and back-end activities. Moreover, it gives clients access to financial services from any bank office around the country and works with data across delivery channels.

Furthermore, CBS assists banks in handling deposits and withdrawals, as well as improving client relationships and transaction management. Banks globally are focusing on incorporating artificial intelligence (AI) into core banking solutions to gain meaningful insights and suggestions from customers. These advancements enable banks to achieve higher operational efficiencies and effectively analyze transactions, identify fake actions, minimize risks, and comprehend and predict consumer behavior. All these factors contribute to the growth of the core banking software industry.

Rise in adoption of cloud-based platforms drives the demand for core banking software. With increase in adoption of cloud-based solutions, banks can monitor payments, transactions, and other banking activities. Furthermore, lower operational costs of core banking software drives the growth of the market. Banks can rely on their core platforms to reduce operational costs as these systems require fewer human resources to function. Besides, the AI-powered infrastructure increases the completion rate of operations and reduces the chances of errors in documentation. Thus, accelerating the growth of the core banking software market. In addition, enhanced productivity and improved customer relationships offered by core banking software drive the core banking software market growth.

However, security worries concerning data loss, mobile viruses, software bugs, and unencrypted data have grown with rise in complex core banking software. These concerns can impact the revenues of corporate banks, credit unions, and financial institutions, and can hinder the market growth. Moreover, low flexibility and insufficient scalability hamper the core banking software market growth. On the contrary, technological advancements such as artificial intelligence (AI), big data, and the cloud in banking systems are expected to provide lucrative growth opportunities to core banking software market trends in the upcoming years. For instance, Finacle core banking solution from Infosys helps banks and financial institutions modernize their cloud-based banking services. It offers a comprehensive suite of capabilities, including flexible product factories, extensive parameterization, product bundling, and reusable business components, to power banks' digital transformation.

By end user, the banks segment acquired a major share in 2022. This is attributed to the significant advancements in information technology and the global expansion of the internet network. These technologies enable banks to reduce manual labor while increasing operational efficiency. Core banking solutions' benefits, such as enhanced efficiency and accessibility, lower extra costs, and increased system flexibility, are projected to promote their adoption across banks.

Region-wise, North America dominated the market in 2022, owing to increase in adoption of digital banking services. Furthermore, key players such as FIS and Fiserv, Inc. are expected to boost the market growth for banking solutions across the U.S. and Canada, as they are focused on launching advanced banking solutions to improve their product portfolio. However, Asia-Pacific is considered to be the fastest-growing region during the forecast period. This is attributed to the rise in adoption of web-based and mobile applications in the banking sector. Furthermore, banks in Asia-Pacific are investing in modernizing their systems to provide better customer experiences, seamless transactions, and real-time data access.

The COVID-19 pandemic accelerated the adoption of digital banking systems and has resulted in greater investments in core banking software, with a focus on digital transformation, cybersecurity, and cloud-based technology. The pandemic worked as a catalyst for banking industry innovation and modernization. With lockdowns and social distancing measures, people turned to online banking more than before. The increase in demand for digital banking services forced banks to improve their core banking software in order to fulfill their customers’ growing expectations. Thus, these factors drive the growth of the core banking software market size.     

Key Findings of the Study

• On the basis of component, the solution segment accounted for the highest core banking software market share, in terms of revenue in 2022.
• On the basis of deployment mode, the on-premise segment attained the highest market share in 2022.
• On the basis of region, North America generated the highest revenue in 2022.  

The key players operating in the core banking software market analysis include Capgemini, Finastra, FIS, Fiserv, Inc., HCL Technologies Limited, Infosys Limited, Jack Henry & Associates, Inc., Oracle, Temenos, and Unisys. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.