USD 26.18 Billion
Report ID: SQMIG45E2156 | Region: Global | Published Date: February, 2024 | Pages: 157 | Tables: 91 | Figures: 65
Third-party Banking Software Market size was valued at USD 26.18 Billion in 2021 and is poised to grow from USD 28.33 Billion in 2022 to USD 53.21 Billion by 2030, growing at a CAGR of 7.6% in the forecast period (2023-2030).
The rapid expansion of the banking, financial services, and insurance (BFSI) industry driven by economic growth acts as a prominent growth catalyst. Furthermore, the incorporation of diverse cloud-computing services, encompassing databases, networking, and analytics, into banking software is also augmenting industry growth. As customers increasingly favor conducting transactions and managing accounts through smartphones and computers, the demand for third-party banking software is set to rise. The adoption of advanced analytical tools such as big data analytics positively impacts growth by efficiently processing large data sets for informed decision-making and market trend identification. Given the data-centric nature of the banking sector, integrating third-party software with various analytical tools enhances data management.
Additionally, there is a discernible shift from traditional to computerized methods for financial transaction tracking and bookkeeping, further bolstering the third-party banking software market. This transition aligns with the banking industry's pursuit of process standardization and core banking systems, thereby propelling market expansion.
The increasing necessity to enhance operational efficiency and productivity within the banking sector fuels the global third-party banking software market. Banking procedures have undergone substantial transformation, necessitating tailored operational approaches. Over recent years, the industry has progressively gravitated towards third-party software due to evolving client preferences, declining revenues, and the imperative for operational flexibility. This software not only empowers banks to gain a competitive edge over rivals by reducing operational costs but also mitigates the risk of human errors that could lead to financial losses
US Third-Party Banking Software Market is poised to grow at a sustainable CAGR for the next forecast year.
Global Market Size
USD 26.18 Billion
Core Banking Software
Core Banking Software
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The third-party banking software market is segmented based on product type, deployment size, application, end-use, and regions. Based on Product Type the market is segmented as, Core Banking Software, Omnichannel Banking Software, Business Intelligence Software, Wealth Management Software, Others. Based on Deployment Size the market is segmented as, On-premise, Cloud. Based on Application the market is segmented as, Risk Management, Information Security, Business Intelligence. Based on End-use the market is segmented as, Commercial Banks, Retail Banks. Based on Regions the market is segmented as, North America, Europe, Asia Pacific, and Latin America.
Third-party Banking Software Market Analysis By Product
In 2022, the core banking software segment emerged as the market leader, contributing to over 31.0% of the global revenue share. The rapidly evolving landscape of the banking sector carries the inherent risk of institutions losing their competitive edge if they fail to adapt to the changing dynamics. Recognizing the significant impact of digital technology on consumer behavior and expectations, financial institutions are turning to core banking software to fulfill these evolving needs.
This realization has prompted various companies to invest substantial efforts in enhancing their banking software offerings, thereby fostering the growth of the core banking software segment. For instance, Regions Bank, a prominent U.S. financial institution, embarked on a technology-oriented transformation in June 2022, leveraging cutting-edge technologies and cloud integration to migrate its core banking platform.
Concurrently, the wealth management software segment is poised to experience rapid growth throughout the forecast period. The surge in demand for third-party wealth management software stems from the retired population's increasing requirement for services that aid in generating adequate retirement income. In light of extended life expectancies and rising medical expenses, individuals are seeking financial advisory and wealth management solutions to safeguard and optimize their assets. Consequently, the upward trend in adopting wealth management software is expected to substantially contribute to overall market growth.
Third-party Banking Software Market Analysis By Application
In the year 2022, the risk management segment emerged as the frontrunner. The application of third-party banking software for risk management empowers financial institutions to enhance the precision of risk assessment and effectively counter potential losses. The escalating instances of security breaches and stringent regulatory compliance mandates, coupled with the advancements in the Internet of Things (IoT), are expected to further propel the expansion of this segment.
Meanwhile, the business intelligence segment is poised to register the swiftest Compound Annual Growth Rate (CAGR) throughout the forecast period. The driving force behind this growth is the pivotal role played by the business intelligence application of third-party banking software in enabling banks to make well-informed decisions based on factual insights into market trends and consumer behaviors. Additionally, the mounting adoption of data analytics by end-users to comprehensively scrutinize generated data is spurring market growth. Furthermore, the integration of artificial intelligence (AI) into banking software is poised to usher in significant growth opportunities for the industry.
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In 2022, North America asserted its dominance in the third-party banking software market, capturing a substantial share of over 30.0% of the global revenue. The region's robust banking industry expansion coupled with the increasing adoption of third-party software to enhance operational efficiency is poised to further amplify the regional market's growth trajectory.
The presence of influential key players like Microsoft and IBM further augments the growth prospects for the industry within the North American region. Furthermore, a pivotal driving factor is North America's position at the forefront of digitization efforts in the Banking, Financial Services, and Insurance (BFSI) sector, which is projected to intensify the demand for third-party software solutions.
On the other hand, Asia Pacific is anticipated to exhibit the highest Compound Annual Growth Rate (CAGR) during the forecast period. This growth can be attributed to stringent regulatory mandates and the flourishing IT infrastructure in countries such as China, India, and Japan. The concerted endeavors undertaken by various entities across the region to foster the adoption of third-party banking software are also poised to contribute significantly to the segment's expansion.
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Third-party Banking Software Market Drivers
Third-party Banking Software Market Restraints
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The competitive landscape of the third-party banking software market is characterized by intense rivalry among key players striving to offer innovative solutions, improve customer experiences, and expand their market reach. The market is dynamic and evolving, driven by technological advancements, changing customer preferences, and regulatory shifts. Key players compete based on factors such as product quality, features, pricing, customer support, and partnerships. The competitive landscape is further enriched by smaller players and startups that offer niche solutions, contributing to market diversity and innovation. Partnerships, collaborations, and mergers and acquisitions also shape the competitive dynamics, enabling players to expand their offerings and strengthen their market presence. As the banking industry continues to evolve, players in the third-party banking software market will strive to differentiate themselves through innovation and customer-centric solutions.
Third-party Banking Software Market Top Player’s Company Profile
Third-party Banking Software Market Recent Developments
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According to our global third-party banking software market analysis, the third-party banking software market is experiencing substantial growth, driven by the increasing demand for efficient and advanced software solutions in the banking sector. This market is segmented based on solutions, services, deployment modes, and regions. The solutions segment includes core banking software, multi-channel banking software, wealth management software, and more. Services offered encompass consulting, integration, and support. Asia-Pacific, especially China and India, presents significant growth opportunities due to rapid technological adoption and expanding banking operations. The market is further fueled by factors like the need for enhanced customer experience, regulatory compliance, and the rise of digital banking. As banks aim for improved operational efficiency, security, and competitive edge, the demand for third-party banking software solutions is projected to continue growing globally.
|Market size value in 2021
|USD 26.18 Billion
|Market size value in 2030
|USD 53.21 Billion
|Forecast Unit (Value)
|North America (US, Canada), Europe (Germany, France, United Kingdom, Italy, Spain, Rest of Europe), Asia Pacific (China, India, Japan, Rest of Asia-Pacific), Latin America (Brazil, Rest of Latin America), Middle East & Africa (South Africa, GCC Countries, Rest of MEA)
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Parent Market Analysis
KEY MARKET INSIGHTS
MARKET DYNAMICS & OUTLOOK
Market Size by Region
KEY COMPANY PROFILES
For the Global Third-Party Banking Software Market, our research methodology involved a mixture of primary and secondary data sources. Key steps involved in the research process are listed below:
1. Information Procurement: This stage involved the procurement of Market data or related information via primary and secondary sources. The various secondary sources used included various company websites, annual reports, trade databases, and paid databases such as Hoover's, Bloomberg Business, Factiva, and Avention. Our team did 45 primary interactions Globally which included several stakeholders such as manufacturers, customers, key opinion leaders, etc. Overall, information procurement was one of the most extensive stages in our research process.
2. Information Analysis: This step involved triangulation of data through bottom-up and top-down approaches to estimate and validate the total size and future estimate of the Global Third-Party Banking Software Market.
3. Report Formulation: The final step entailed the placement of data points in appropriate Market spaces in an attempt to deduce viable conclusions.
4. Validation & Publishing: Validation is the most important step in the process. Validation & re-validation via an intricately designed process helped us finalize data points to be used for final calculations. The final Market estimates and forecasts were then aligned and sent to our panel of industry experts for validation of data. Once the validation was done the report was sent to our Quality Assurance team to ensure adherence to style guides, consistency & design.
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