Financial Fraud Detection Software Market Expected to Reach $50.3 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Financial Fraud Detection Software Market, by Component (Solution and Service), Deployment Mode (On-premise, and Cloud), Fraud type (Money laundering, Identity Theft , Debit & Credit Card Frauds, Claim Frauds , Transfer Frauds , and Others) and End User (Banks, NBFCs, and Others): Global Opportunity Analysis and Industry Forecast, 2023-2032." The financial fraud detection software market was valued at $13 billion in 2022, and is estimated to reach $50.3 billion by 2032, growing at a CAGR of 14.8% from 2023 to 2032.

Financial fraud detection software and programs that assist in identifying, detecting, and preventing any finance-related malpractices or fraudulent activities that may be occurring in various types of financial institutions. The tools leverage the benefits of advanced technologies and analytical algorithms to scan through large volumes of data in real-time and quickly to detect any transaction that deviates from normal patterns and could be an indicator of fraud.

Furthermore, The growing adoption of online banking applications and mobile banking services and increasing incidences of financial fraud are boosting the growth of the global financial fraud detection software market. in addition, the increase in the use of digital transformation technology the positively impacts growth of the financial fraud detection software market. However, growing incidents of false positive rates and increasing fraud complexity are hampering the financial fraud detection software market growth. On the contrary, rising Innovations in the Fintech Industry are expected to offer remunerative opportunities for the expansion of the financial fraud detection software market during the forecast period.

Depending on deployment mode, the on-premise segment holds the largest financial fraud detection software market share owing to, increasing investments by key players in the latest technologies for communication, growing demand for high data speed, and growing need for enhanced broadband capacity. However, the cloud segment is expected to grow at the highest rate during the forecast period, due to huge adoption as it takes the complete responsibility of integration of the software and solving any issue related to security.

Region-wise, the financial fraud detection software market size was dominated by North America in 2022 and is expected to retain its position during the forecast period, owing to presence of the most successful financial fraud detection software businesses in the region. These companies include Bank of America, JPMorgan Chase, and Citigroup. These businesses have a great need for innovative banking system software products that may help them optimize their business processes and boost their level of competitiveness. However, Asia-Pacific is expected to witness significant growth during the forecast period, owing to increasing government initiatives in the banking industry and an increasing number of mobile and internet users in developing nations such as India and China are accounted development of private and rural banking.

The financial fraud detection software market has witnessed stable growth during the COVID-19 pandemic, owing to a rise in demand for anti-money laundering (AML), fraud detection solutions, and various other solutions during the pandemic situation. In addition, the COVID-19 pandemic has resulted in changes in model performance, as more continuous monitoring and validation is required to mitigate various types of risks, compared to static validation and testing methods, which, in turn, drive the development of advanced machine learning models. In addition, with rapid digital transformation, various governments have introduced stringent regulations to protect end users’ data such as General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). Thus, governments in various countries have taken strict actions toward the defaulters of COVID-19 regulations, and natural language processing technology is helping financial institutes to scan their internal policies as well as claims documents to check their compliance with different regulatory policies. However, COVID-19 pandemic is making it even harder for larger insurers to keep pace, and even more difficult for midsize and smaller insurers to adopt AI/ML technologies, owing to long development timelines and high investment requirements.

The integration of advanced technologies such as AI and big data in financial companies is helping to improve various aspects of a company such as perception, reasoning, learning, and problem-solving of the human mind for detecting and predicting risks, which, in turn, is driving the growth of the market. In addition, in the coming years, the number of connected consumer devices such as cars, fitness trackers, home assistants, smartphones, and smartwatches will continue to increase rapidly, which is expected to create huge amount of data needed for upgrading the machine learning algorithms. Furthermore, according to a research report, around 1 trillion connected devices will be deployed by 2025 across the globe, which will help financial institutes to understand the clients more deeply, resulting in new product categories, more personalized pricing, and increasingly real-time service delivery, which are expected to provide lucrative opportunity for the financial fraud detection software market trends. Moreover, various public and private entities are expected to come together to create ecosystems to share data for multiple use cases under a common regulatory and cybersecurity framework, which, in turn, is expected to provide lucrative opportunity for the growth of the global market.

Key Findings of The Study

• By component, the solution segment accounted for the largest financial fraud detection software market share in 2022.
• Region-wise, North America generated highest revenue in 2022.
• Depending on the end user, the banks segment generated the highest revenue in 2022.

The key players that operate in the financial fraud detection software market analysis are Feedzai, FiCO, Oracle Corporation, ThreatMetrix, SAS Institute Inc., SAP SE, Fiserv, Inc., IBM Corporation, Software AG, and Experian plc. These players have adopted various strategies to increase their market penetration and strengthen their position in the financial fraud detection software industry.