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The core banking solutions market size is forecast to increase by USD 18.47 billion, at a CAGR of 16.82% between 2023 and 2028. The market's expansion hinges on several factors, notably the continuous technological advancements within core banking solutions. As the sector evolves, there's a heightened demand for scalability to accommodate growing operations and adapt to market shifts. This growth is further propelled by the widespread digital transformation initiatives across industries, compelling institutions to modernize their infrastructure and services. Embracing cutting-edge technologies not only enhances operational efficiency but also improves customer experience, fosters innovation, and enables banks to stay competitive in an increasingly digital landscape. Thus, the convergence of these factors underlines a significant paradigm shift in the industry towards more agile, efficient, and customer-centric banking solutions.
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This report extensively covers market segmentations by deployment (on-premise and cloud), end-user (Large enterprises, Small, and medium enterprises). and geography (North America, Europe, APAC, Middle East and Africa, and South America).
The market share growth by the on-premises segment will be significant during the forecast period. Core banking solutions refer to back-end systems utilized by financial institutions to manage various banking functions, including loan management, withdrawals, deposits, payments, real-time transactions, and risk management. These systems enable banks to maintain centralized databases for customer accounts and transactions, ensuring compliance with financial regulations and data protection laws.
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The on-premises segment was the largest and was valued at USD 5.98 billion in 2018. Banks can choose between on-premise and cloud-based core banking software to meet their unique needs. On-premise solutions offer greater control over data security and compliance, allowing for stringent security measures, access controls, encryption, and monitoring. They can also be designed with redundancy and failover mechanisms for minimal downtime. Modern core banking software incorporates automation in banking, money transfers, analytics, and integration of artificial intelligence (AI) for improved customer experience (CX) and user experience. Financial institutions prioritize data access and management, ensuring privacy concerns are addressed through advanced cybersecurity measures and omnichannel banking experiences. Digital transformation and lower operational costs drive the adoption of these solutions, with an increasing focus on big data and customer demand from Gen Z. Additionally, emerging technologies like blockchain and AI further enhance the functionality and security of these systems. Thus, these factors will contribute to the growth of the on-premises segment, which will boost the global market during the forecast period.
Large enterprises often have complex financial needs, including cash management, lending, and treasury services. Modern banks and non-traditional businesses, including retailers and fintech start-ups, increasingly adopt core banking solutions for managing complex financial needs. These systems offer advanced capabilities such as real-time payment processing, mobile payment wallets, and fintech applications. Product launches focus on superior service, accessibility, affordability, and cutting-edge technologies. Clients benefit from enhanced payment options, data capabilities, and strategies for cash management, lending, and treasury services. However, security risks, including unencrypted data and application vulnerabilities, necessitate robust security measures. Technology providers play a crucial role in addressing these concerns while optimizing value chains and mobile payments within the core banking ecosystem. Thus, these factors will boost the growth of the large enterprises segment, which will drive the global market during the forecast period.
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North America is estimated to contribute 31% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
The Market in North America is experiencing significant growth due to the rising trend of digital banking and the increasing demand for mobile and online payment options. Modern banks are modernizing their systems to provide personalized, real-time services and meet client expectations for accessibility, superior service, and affordability. Fintech applications and mobile payment wallets are becoming increasingly popular, with technology providers and fintech start-ups leading the way. However, with these advancements come security risks, such as unencrypted data and application vulnerabilities. Banks and non-traditional businesses, including retailers, must implement robust strategies to mitigate these risks and ensure the secure flow of value chains in the digital banking landscape. Product launches and data capabilities are key differentiators, with cutting-edge technologies enabling real-time transactions and insights into customer behavior and operational efficiency. The quickly expanding sizes of enterprises and the increasing number of applications of these solutions are further expected to boost the growth of the regional market during the forecast period.
In the dynamic world of financial services, these Solutions have emerged as a crucial component for Banks and Financial Institutions to manage their customer accounts, transactions, and financial transactions in a real-time, centralized manner. These solutions enable seamless processing of Withdrawals, Deposits, Payments, Money transfers, and Loan management. Core Banking Software, powered by Cloud-based platforms and Artificial Intelligence (AI), offers automation in banking, data access, and data management. The integration of AI enhances Risk management, Compliance, Customer experience (CX), and User experience. However, the implementation of these Solutions raises Privacy concerns and Data security issues. Banks must ensure robust security measures to protect sensitive customer information. Gen Z, the tech-savvy generation, demands instant and convenient banking services. These Solutions, with their capabilities in automation and real-time processing, cater to these expectations. The market is vast and diverse, with offerings ranging from On-premise to Cloud-based platforms. The adoption of Blockchain technology in Core Banking Solutions further strengthens their security and efficiency. In conclusion, these Solutions are essential for modern banking, offering advanced functionalities, improved customer satisfaction, and enhanced security.
Growing digital transformation is notably driving market growth. The global market has experienced significant growth due to the increasing digitization of banking services. This back-end system enables banks and financial institutions to manage loans, withdrawals, deposits, and payments in a real-time and centralized manner. These software offers various benefits, including risk management, customer experience (CX) enhancement, compliance, and data management through a centralized database and analytics.
The COVID-19 pandemic accelerated the adoption of core banking solutions as financial institutions shifted to remote operations. Key features include automation in banking, data access, privacy concerns, artificial intelligence (AI) integration, and component options like on-premise and cloud-based platforms. Digital transformation, lower operational costs, customer demand, and cybersecurity are driving factors. Gen Z and blockchain technology are also influencing the market, with an emphasis on omnichannel banking experiences, data security, and digital banking systems. Hence, the market in focus is expected to witness growth during the forecast period.
The adoption of AI and ML to improve customer experience is an emerging trend shaping the market growth. The market is experiencing significant growth due to the integration of advanced technologies such as AI, Big Data, and IoT into core banking software. This shift towards virtual technology enables real-time transactions, b, deposits, and payments. Banks are adopting centralized databases with automation in banking to enhance customer experience (CX) and satisfaction while ensuring compliance and data security.
The increasing use of these systems among financial institutions caters to the growing demand from Gen Z and the integration of blockchain technology for secure money transfers. Cloud-based platforms offer lower operational costs and omnichannel banking experiences. However, privacy concerns and cybersecurity remain critical challenges. AI is being integrated into these components for risk management and user experience enhancement. Financial institutions must balance the benefits of on-premise and cloud solutions while addressing the demands for digital transformation. Hence, these factors will boost the market in focus during the forecast period.
Risks associated with data migration are a significant challenge hindering the market growth. In the financial sector, they play a pivotal role in managing customer accounts, transactions, loans, withdrawals, and payments through a centralized back-end system. Real-time processing is essential for customer experience (CX) and satisfaction, as well as ensuring compliance with regulations. With the increasing use of digital banking systems and the integration of artificial intelligence (AI), data access and management have become critical components of these solutions.
Banks and financial institutions rely on core banking software to securely process financial transactions, money transfers, and automate various operations. The shift towards cloud-based platforms and digital transformation has raised privacy concerns, necessitating robust data security measures. Cybersecurity is a top priority, as the risk of data breaches and cyberattacks increases with the proliferation of endpoints. Omnichannel banking experiences, lower operational costs, and the integration of AI and blockchain technology are driving the market for core banking solutions. Gen Z's demand for seamless, convenient banking experiences further emphasizes the importance of user experience and data management in these systems. Thus, the risks associated with data migration will impede the growth of the market during the forecast period.
The market report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Market Customer Landscape
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.
Capgemini Service SAS - The company offers products that help banks reduce the total cost of ownership, and boost operational efficiency and flexibility.
Capital Banking Solutions - The company offers products for retail, corporate, credit unions, private-banking, and neo banks.
Fidelity National Information Services Inc. - The company offers products such as the HORIZON Banking System.
The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies 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 companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2023 to 2027, as well as historical data from 2017 to 2022 for the following segments.
Core Banking Solutions refer to a type of technology-driven banking service that allows customers to access and manage their financial accounts through various channels such as the Internet, Mobile, ATMs, and branches. The Core Banking Market is witnessing significant growth due to the increasing demand for digital banking services and the need for banks to offer seamless and convenient banking experiences. Key players in the market include Compace, Customer, Deposits, Payments, and Transactions (DPoSIT), Customer Service and Support, Real-time Centralization, and Analytics. These solutions offer benefits such as improved operational efficiency, enhanced customer experience, increased security, and better risk management. The market for Core Banking Solutions is driven by factors such as the increasing adoption of digital banking, the need for banks to offer 24/7 banking services, and the growing competition among banks to offer innovative and convenient banking solutions.
Additionally, the implementation of regulatory frameworks and the increasing focus on financial inclusion are also expected to drive the growth of the Core Banking Solutions Market. In conclusion, the Core Banking Solutions Market is witnessing significant growth due to the increasing demand for digital banking services and the need for banks to offer seamless and convenient banking experiences. Key players in the market offer solutions that offer benefits such as improved operational efficiency, enhanced customer experience, increased security, and better risk management. The market is driven by factors such as the increasing adoption of digital banking, the need for 24/7 banking services, and the growing competition among banks to offer innovative and convenient banking solutions.
Market Scope |
|
Report Coverage |
Details |
Page number |
170 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 16.82% |
Market Growth 2024-2028 |
USD 18.47 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
14.88 |
Regional analysis |
North America, Europe, APAC, Middle East and Africa, and South America |
Performing market contribution |
North America at 31% |
Key countries |
US, China, Japan, Germany, and UK |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Capgemini Service SAS, Capital Banking Solutions, Computer Services Inc., Fidelity National Information Services Inc., Finacus Solutions Pvt. Ltd., Fiserv Inc., HCL Technologies Ltd., Infosys Ltd., Jack Henry and Associates Inc., NCR Corp., Oracle Corp., SAP SE, Tata Sons Pvt. Ltd., Temenos AG, Trust Systems and Software Pvt. Ltd., Unisys Corp., Virmati Infotech Pvt. Ltd., Vista Equity Partners Management LLC, Websoftex Software Solutions Pvt. Ltd., and Zenith Software Ltd. |
Market dynamics |
Parent market analysis, Market forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the market forecast period. |
Customization purview |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Deployment
7 Market Segmentation by End-user
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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