Global Third-Party Banking Software Market Grows at a Steady CAGR of 7.5%

Introduction

The global third-party banking software market consists of outsourced software developed by independent vendors to assist banks and financial firms in optimizing operations, improving customer experiences, and adhering to regulations. These offerings span core banking platforms, risk management systems, mobile banking apps, and payment solutions. Banks increasingly favor third-party tools for faster rollout, flexibility, and lower costs versus in-house development. Digital banking evolution, fintech partnerships, and cloud-based infrastructure adoption propel market growth.

This market is fueled by banking, financial services, and insurance (BFSI) expansion. Financial institutions are embracing modern technologies such as databases, analytics, and networking via cloud services to deliver better customer experiences and boost efficiency. With the growing demand for secure, reliable, and advanced third-party software, further expansion is anticipated as consumers continue to favor faster, more convenient banking services. While North America and Europe dominate with high adoption, Asia-Pacific is rapidly growing due to financial inclusion efforts and demand for digital banking.

Market Dynamics

Emphasis on security and fraud mitigation drives market growth

As digital transactions increase and cyber threats become more advanced, cybersecurity has become a top concern in banking. Third-party vendors implement strong security protocols to protect sensitive data and ensure secure operations, including multi-factor authentication (MFA), AI-powered fraud detection, encryption, and live transaction monitoring.

• For instance, in March 2025, NatWest integrated OpenAI into its digital assistants Cora and AskArchie to bolster fraud prevention and enhance customer service. This move led to a 150% rise in customer satisfaction and lowered the need for human agents. It's part of NatWest’s strategy to combat the £570 million lost to fraud in early 2024.

Such features are vital to meeting regulations and fostering user trust, solidifying their role in market expansion.

Rise of cloud-based platforms creates tremendous opportunities

Cloud technology is revolutionizing the third-party banking software market. These platforms provide flexible, cost-effective, and scalable solutions, enabling banks to boost efficiency, transition from outdated systems, and better meet digital demands. Banks increasingly embrace the cloud for agility, fintech integration, and enhanced service delivery.

• For example, in April 2025, nCino, a cloud-native banking software provider, grew its global presence by acquiring DocFox, FullCircl, and Sandbox Banking between 2024 and early 2025. These acquisitions strengthened nCino’s onboarding automation and AI integration capabilities. By 2025, nCino will serve more than 2,700 banks globally, including TD Bank and Santander.

Cloud platforms offer faster updates, improved cybersecurity, and easier compliance. They also support APIs, AI, and data analytics for smart banking features. This reduces capital outlay and drives innovation, helping banks compete in a digital-first world.

Regional Insights

Europe remains the global leader in third-party banking software, supported by a mature financial landscape, progressive regulations, and strong digital momentum. The EU’s PSD2 directive has significantly accelerated open banking, prompting banks to adopt third-party software for compliance and competitiveness.

Germany, the UK, France, and the Netherlands lead this transformation, with ongoing upgrades to legacy systems to align with digital-first models. Germany and the UK stand out due to their active fintech ecosystems and strong IT capabilities. UK banks have widely adopted third-party tools for real-time payments, mobile apps, and AI-powered services.

Key Highlights

• The global third-party banking software market size was valued at USD 6.77 billion in 2024 and is projected to grow from USD 7.28 billion in 2025 to USD 12.98 billion by 2033, exhibiting a CAGR of 7.5% during the forecast period (2025-2033).
• By product type, the market is bifurcated into Core Banking Software, Omnichannel Banking Software, Business Intelligence Software, Wealth Management Software, and Others. Core banking software segment holds the largest market share.
• By deployment, the market is bifurcated into On-premise and Cloud. On-premise holds the largest market share.
• By application, the market is bifurcated into Risk Management, Information Security, and Business Intelligence. Risk management segment holds the largest market share.
• By end-use, the market is bifurcated into Commercial Banks and Retail Banks. The retail banks segment holds the largest market share.
• Based on region, the global third-party banking software market is segmented into North America, Europe, Asia-Pacific, Latin America, the Middle East and Africa. Europe dominates the global market.

Competitive Players

1. Microsoft Corporation
2. International Business Machines (IBM) Corporation
3. Oracle Corporation
4. SAP SE
5. Tata Consultancy Services (TCS)
6. Infosys Ltd.
7. Capgemini SE
8. Accenture plc
9. FIS, Inc.
10. Fiserv, Inc.

Recent Developments

• In March 2025, UK-based digital bank Starling is globally promoting its proprietary banking software, 'Engine'. With existing clients in Romania and Australia, Starling aims to secure 40 to 50 clients in the coming years, potentially generating substantial annual revenues and highlighting the demand for advanced banking platforms.

Segmentation

1. By Product Type
   1. Core Banking Software
   2. Omnichannel Banking Software
   3. Business Intelligence Software
   4. Wealth Management Software
   5. Others
2. By Deployment Size
   1. On-premise
   2. Cloud
3. By Application
   1. Risk Management
   2. Information Security
   3. Business Intelligence
4. By End-use
   1. Commercial Banks
   2. Retail Banks
5. By Region
   1. North America
   2. Europe
   3. Asia-Pacific
   4. Latin America
   5. The Middle East and Africa