Anti-Money Laundering (AML) Software Market by Deployment, Component, and Geography - Forecast and Analysis 2023-2027

Anti-Money Laundering Software Market Forecast 2023-2027

Anti-Money Laundering Software Market size is estimated to grow by USD 2.76 billion between 2022 and 2027, accelerating at a CAGR of 15.01% during the forecast period. The growth of the market depends on several factors, including an increased need for suspicious activity reporting, an increased need for automated transaction monitoring systems, and an increased need for risk management. Market growth is notably fueled by the heightened demand for risk management solutions. AML software aids in analyzing historical data, comparing it with alert outcomes using predictive models, and identifying non-obvious transaction patterns suggestive of risk. Predictive models prioritize uncovering compliance risks that were previously obscured, aiming to offer deeper insights. Advanced functionalities like automated investigation contribute to the effective handling of risks.

What will be the size of the Market During the Forecast Period?

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Market Segmentation 

This report extensively covers market segmentation by deployment (on-premises and cloud-based), component (software and services), and geography (North America, Europe, APAC, Middle East and Africa, and South America) It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.

Market Dynamics and Customer Landscape

The Anti-Money Laundering (AML) Software Market is propelled by the demand for cloud-based AML solutions to combat financial crimes. The surge in AI/ML-powered solutions addresses evolving security measures amid the rise of digital payments and Internet banking, driven by customer preferences and technological improvements. However, challenges persist with the sophistication of attacks by cybercriminals, including ransomware and identity theft, alongside emerging threats like cryptocurrency-related scams. Addressing these concerns mandates enhanced AML skills, robust security protocols, and compliance with stringent government regulations amidst the deployment of AML solutions by businesses and criminal groups alike. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

Key Market Driver

The increased need for risk management is notably driving market growth. AML software helps in analyzing historical data and matches it with the outcomes of the alert with its predictive models and alerts for non-obvious transaction patterns indicative of risk. The focus of predictive models is to provide deeper insight into compliance risk that was previously hidden. Some advanced features, such as automated investigation, help in the efficient management of risks.

 The software facilitates financial analysts and AML investigators to check whether the customer or transaction is risky and take appropriate action. Other features that help banks in managing risks are suspicious activity detection, watch list filtering, alert investigation, case management, and regulatory reporting. Such features will support the increased adoption of AML software, which will propel the growth of the market during the forecast period.

Significant Market Trend

Increasing demand for know-your-customer analytics is an emerging trend in the market. AML software used automated transaction monitoring systems to produce alerts in case of suspicious transactions prior to the introduction of KYC analytics. With the increasing cost of compliance, the risk of non-compliance, and the challenges related to acquiring and retaining the right customers, all financial services firms worldwide are increasingly adopting AML and KYC analytics. Advances in technology enable banks and financial institutions to collect an enormous amount of data, but these organizations face multiple challenges in compiling the data to build strong relationships, improve returns, and reduce risk.

KYC analytics can reduce the complex and expensive burden of compliance on both AML and KYC departments. AML software with KYC analytics enables banks to properly document, understand, and actively manage the flow of data across the organization and its systems. It also enables banks to maintain CRM standards and comply with KYC norms. Such factors will drive the growth of the AML software market during the forecast period.

Major Market Challenge

The high cost of implementation is the major challenge impeding market growth. The deployment of AML software is an expensive process, and its implementation takes a long time. This increases the importance of the process because once the deployment has taken place, it is expensive to make any changes. It also requires expensive additional infrastructure, complex programming, and extra time and money to ensure data integration and data quality.

Most AML software vendors charge additional fees for software updates, which include improved features. Some vendors force the end-users to purchase updates by refusing to provide technical support if they have not purchased the latest version. Thus, the high cost associated with the deployment of AML software will hamper the market growth and trends during the forecast period. 

Customer Landscape

The market forecasting report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the market research report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and forecasting strategies.

 Customer Landscape

Who are the Major Market Companies?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Verafin Inc. - The company offers anti-money laundering software as its key offering that helps to strengthen regulatory compliance and enhance the ability to detect, investigate, and report potentially suspicious activity. Under its unified segment, the company is involved in offering anti-financial crime management solutions with a mission to create the world's most effective crime-fighting network.

The report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:

• BAE Systems Plc
• EastNets
• Exiger
• Fair Isaac Corp.
• International Business Machines Corp.
• Moodys Corp.
• NICE Ltd.
• Open Text Corp.
• Oracle Corp.
• Refinitiv
• Sanction Scanner
• SAS Institute Inc.
• Thomson Reuters Corp.
• Trulioo Information Services Inc.
• Truth Technologies Inc.

Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.

What is the Fastest-Growing Segment in the Market?

The Anti-Money Laundering (AML) Software Market witnesses significant traction, driven by the demand for cloud-based AML solutions combating financial crimes. Embracing AI/ML-powered solutions and services, institutions bolster security measures amidst the surge in digital payments and internet banking. Addressing technological complexities and the growing sophistication of attacks by cybercriminals, platforms mitigate risks of ransomware attacks and identity theft, including cryptocurrency-related scams. Robust financial systems necessitate adept AML skills and stringent security protocols to safeguard private client information amid calls for transparency in funding sources and exposure of shell companies. Overcoming challenges like lack of awareness and navigating government regulations, the deployment of AML solutions is crucial for both businesses and combating criminal groups, leveraging expertise to fortify defenses.

The market share growth of the on-premises segment will be significant during the forecast period. In an on-premises deployment model, the software is purchased and installed on the user's server. IT specialists maintain it in the organization. The on-premises AML software is increasingly adopted by large complex financial firms for their large complex financial operations, as they are robust, expensive, highly customizable based on organization requirements, and secure.

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The on-premises segment was valued at USD 1.04 billion in 2017 and continued to grow until 2021. On-premises AML solution offers a high level of security and features such as enterprise-wide monitoring, investigations, and reporting, behavior-detection library, customized thresholds, and risk scoring, case management streamline analysis and resolution, full compliance with regulations, guidelines, and best practices. Owing to the above-mentioned factors, the on-premise segment of the market is expected to grow during the forecast period.

Which are the Key Regions for the Market?

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APAC is estimated to contribute 31% to the growth of the global market during the forecast period. Another region offering significant growth opportunities to companies in North America. Technavio’s analysts have elaborately explained the regional market trends and analysis, and drivers that shape the market during the forecast period. Concealing information or material facts from financial institutions in transactions that involve entities that are involved in money laundering. This has made most financial enterprises in North America adopt AML solutions to comply with financial regulatory requirements. AML software offers effective AML or combating the financing of terrorism compliance by performing risk assessments, know-your-customer (KYC) evaluation, and transaction monitoring and investigations. Furthermore, an increase in the adoption of mobile devices for personal and professional purposes has increased the adoption of AML software solutions, which is positively affecting market revenue. 

In 2020, the outbreak compelled governments across North America to impose lockdowns. This changed the work scenario of end-users, especially in the ICT sector, as employees started to work from home, which further generated the need for AML software solutions. Many companies are planning not to start their physical operations and have opted for remote work for an indefinite period. Thus, the market for AML software in the region is expected to grow during the forecast period.

Segment Overview

The report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027. 

• Deployment Outlook
  • On-premises
  • Cloud-based

• Component Outlook 
  • Software
  • Services

• Region Outlook 
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa
  • South America
    • Brazil
    • Argentina

Market Analyst Overview

The market is propelled by continuous technical improvements, combating AML threats stemming from e-commerce and the ever-evolving tactics of fraudsters. With a focus on safeguarding against identity thefts and tracking transaction logs, platforms thwart the efforts of money launderers, particularly in property transactions where anonymity poses risks. Compliance with AML procedures is paramount across sectors like the real estate industry and insurance sector, necessitating collaboration among industry groups, regulatory authorities, and technology suppliers. Amid concerns of terrorism financing, solutions ensure the financial system's integrity through robust customer due diligence and risk assessment, mitigating the risk of penalties and preserving the reputation of financial institutions. Offering comprehensive, scalable, and user-friendly solutions, the market caters to diverse needs with tailored, cost-effective solutions to address vulnerable aspects and fortify defenses against illicit activities.

Market Scope
Report Coverage	Details
Page number	166
Base year	2022
Historic period	2017-2021
Forecast period	2023-2027
Growth momentum & CAGR	Accelerate at a CAGR of 15.01%
Market growth 2023-2027	USD 2.76 billion
Market structure	Fragmented
YoY growth 2022-2023(%)	13.58
Regional analysis	North America, Europe, APAC, Middle East and Africa, and South America
Performing market contribution	APAC at 31%
Key countries	US, China, India, Germany, and UK
Competitive landscape	Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks
Key companies profiled	Abrigo, ACI Worldwide Inc., Acuity Knowledge Partner, Ascent, BAE Systems Plc, EastNets, Exiger, Fair Isaac Corp., International Business Machines Corp., Moodys Corp., NICE Ltd., Open Text Corp., Oracle Corp., Refinitiv, Sanction Scanner, SAS Institute Inc., Thomson Reuters Corp., Trulioo Information Services Inc., Truth Technologies Inc., and Verafin Inc.
Market dynamics	Parent market analysis, market growth analysis, market analysis and report, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period.
Customization purview	If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

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What are the Key Data Covered in this Anti-Money Laundering Software Market Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the anti-money laundering software (AML) market between 2023 and 2027
• Precise estimation of the anti-money laundering software market size and its contribution to the parent market
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the industry across North America, Europe, APAC, Middle East and Africa, and South America
• Thorough analysis of the market’s competitive landscape and detailed information about vendors
• Comprehensive analysis of factors that will challenge the growth of anti-money laundering software market vendors

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