Account Reconciliation Software Market

Market Overview

The global account reconciliation software market size was valued at USD 2001.23 million in 2021 and is estimated to reach an expected value of USD 6930 million by 2030, registering a CAGR of 14.8% during the forecast period (2022 – 2030).

Reconciliation is a process used by accounting professionals for comparing the set of two records for checking the monthly statements of an individual. In addition, reconciliation software helps enterprises improve the quality and accuracy of their accounting process and reduces errors and inaccuracies. Additionally, it gives enterprises total control over the automation process by managing crucial procedures effectively and securely. Further, numerous sectors, like BFSI and retail, are implementing this software to completely control the billing process and accounting transparency. A profitable opportunity for the market is also anticipated as cloud-based reconciliation software adoption increases among various SMEs.

Market Dynamics

Global Account Reconciliation Software Market Drivers

Growth in Online Transaction

The rise in digitization across various industries has led to an increase in demand for reconciliation software. In addition, the retail industry has emerged as one of the most agile sectors in the U.S., owing to a surge in urbanization, favorable government policies, and a rise in online transactions. Moreover, the U.S. is considered one of the fastest-growing countries in the e-commerce industry. This is a significant factor that drives the growth of the market. For instance, according to a survey by eMarketer in 2019, U.S. consumers have spent $589.92 billion on various e-commerce sites. Thus, the rise in sales on e-commerce sites has led to an increase in online payments and electronic billings; hence, retailers are adopting recon software to maintain a record of online data, boosting the market's growth. In addition, different small & medium size organizations are increasing their popularity and market share by providing online products. This, in turn, boosts the need for reconciliation software.

Substantial Savings for Organizations with High Volume Bank Reconciliation Needs

For both large and small & medium size businesses, bank reconciliation is a necessary but time-consuming and challenging operation. Thus, bank reconciliation software enables both large, small, and medium-sized enterprises to do bank recs more quickly and accurately. This promotes market expansion. Additionally, bank reconciliation enables businesses to understand better their cash situation in less time and with fewer resources. Further, the need for creating electronic and online bills and the surge in credit card payments fuel the demand for bank reconciliation software among end users. In addition, bank reconciliation provides unprecedented flexibility, intelligence, and automation for reconciling bank activities and daily payments, which fuels the market's growth.

Global Account Reconciliation Software Market Restraint

Different Security Issues Faced by Enterprises

One of the major factors that restrict the growth of recon software is a rise in cyberattacks on online transactions, owing to the lack of security provided by the software. In addition, organizations using reconciliation software face various issues, which include error-prone inputs, slow data inputs, and the inability to detect significant frauds. Moreover, small & medium size organizations are more prone to human errors and cyberattacks, hampers market growth. In addition, fraud detection is one of the significant factors for manufacturing companies to adopt reconciliation software. If these processes do not have adequate oversight, it leads to a loss in revenue. Furthermore, the rise in cyberattacks on various industries and the inability of the software to detect these attacks restrict the market's growth.

Global Account Reconciliation Software Market Opportunities

Growth in Use of Machine Learning and Artificial Intelligence In Recon Software

Different types of recon software and development include artificial intelligence (AI) as an essential component. Many recon software producers, like Oracle Corporation, SAP SE, Fiserv, and others, are using machine learning and artificial intelligence to build their recon software models, creating attractive market expansion potential. For instance, in 2018, SAP SE unveiled its SAP Cash application, which uses machine learning and artificial intelligence to enhance the reconciliation process and cash flow management. Additionally, a few merchants are using artificial intelligence in their software for reconciliation to decrease human error in the accounting process and improve the security of bank transactions. AI also enhances the visibility of every transaction, giving shops a greater understanding of client transactions. Thus, providing lucrative opportunities for the market.

Regional Analysis

By region, the global account reconciliation software market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

North America was the highest revenue contributor and is estimated to grow at a CAGR of 13.7%. The growth of the North American accounts reconciliation software market is driven by the rise in the adoption of advanced technologies among the fintech and banking sectors and the need to manage the high volume of data generated by online transactions. In addition, various banks in North America have adopted account reconciliation software to identify real-time banking frauds and automate the transaction process of customers. Furthermore, the surge in the adoption of transaction data across the region and the rise in mobile and online banking penetration among individuals propel the market's growth. For instance, according to a survey conducted in the U.S. by ReconArt in 2018, around 58% of the U.S. population used mobile banking and online banking, which creates a considerable amount of transaction data. Thus, to manage a large data set and reduce human errors, banks, retailers, manufacturing, and many other industries are adopting account reconciliation software, which boosts the market's growth.

Europe is the second largest region. The Europe account reconciliation software market is projected to reach USD 2359 million by 2030, growing at a CAGR of 14.2%. Businesses in Europe have adopted account reconciliation software to manage large customer bases efficiently and minimize employees' time to perform non-core tasks such as bookkeeping and accounting. In addition, BFSI companies have been progressively using account reconciliation software tools, which help them reduce the time spent on data preparation by 15x and support them in optimizing processes to improve customer satisfaction. This enables such organizations to increase their customer retention rate and enhance their share in the market.

Furthermore, many fintech and government institutions struggle with costly operational activities such as manual and statement reconciliation processes. Thus, to overcome this difficulty, many banks in the UK have adopted account reconciliation software, which boosts the market's growth. For instance, according to a survey conducted by Citibank in 2019, around 70% of banks in the UK used automated account reconciliation software, which reduced their operational cost and improved security. Moreover, the surge in the adoption of advanced technology such as artificial intelligence and machine learning in account reconciliation software to reduce the risk of cyberattacks and privacy breaches is expected to provide lucrative opportunities for the market.

Asia-Pacific is the third largest region. Large organizations in this region focus on searching for & implementing solutions by which their business can use intelligent techniques to automate their accounting process to improve customers' overall experience. In addition, many regional enterprises have now implemented cloud-based reconciliation solutions to enhance employee productivity and business performance. A robust IT infrastructure development is anticipated to facilitate the future growth of cloud-enabled account reconciliation software. Many SMEs and start-up companies are operating in Asia-Pacific. These start-ups prefer cloud-enabled account reconciliation software, which is less costly than on-premise account reconciliation software. Growth in the adoption of cloud-enabled account reconciliation software is expected to increase, owing to numerous benefits such as streamlining financial processes, increase in audit readiness, and providing enhanced accuracy in the accounting process. Furthermore, developing regions in Asia-Pacific, such as India, China, and Singapore, are more focused on adopting account reconciliation software, owing to population growth and the need for fast & automated banking systems. In addition, the rise in the need to accelerate payment processing time and provide better customer relationship management fuels market growth.

Segmental Analysis

The global account reconciliation software market is segmented on component, deployment mode, enterprise size, reconciliation type, industry vertical, and region. 

In terms of components, the global account reconciliation software market is bifurcated into software and services. The software segment was the highest contributor to the market and is estimated to grow at a CAGR of 14.1% during the forecast period. The software segment dominated the global account reconciliation software market in 2019 and is expected to continue this trend during the forecast period, owing to an increase in the adoption of recon software solutions in the retail industry. In addition, organizations in the retail sector have started adopting this software to enhance their operational efficiency and help employees in better inventory management. Furthermore, recon software has benefited various retail industries by improving their revenue margin, saving operating costs, and automating their sales transaction details.

By deployment model, the global account reconciliation software market is segmented into on-premise and cloud. The on-premise segment was the highest contributor to the market and is estimated to grow at a CAGR of 13.6% during the forecast period. On-premise deployment mode is considered widely valuable for large enterprises. It involves significant investments to implement, and organizations need to purchase interconnected servers and solutions to manage the system. Furthermore, better data security than cloud-based solutions promotes its adoption among organizations, which drives demand for this segment in the global account reconciliation software market.

In terms of enterprise size, the global account reconciliation software market is segmented into large enterprises and small & medium enterprises. The large enterprise segment was the highest contributor to the market and is estimated to grow at a CAGR of 13.7% during the forecast period. An increase in the need to eliminate human errors and a rise in demand for faster, cheaper, and easier systems by enterprises boost the adoption of software among large enterprises. Furthermore, ongoing developments in cloud-based recon software by various market players are also expected to provide opportunities for market growth. In addition, large enterprises dominate the market as the adoption of recon software has become an integral part of these large-scale retail organizations to sustain in the competitive market. In addition, they prefer the implementation of software and services expected to assist them in increasing their profits, which leads to a rise in investments in recon software and services made by large organizations, which is opportunistic for the market.

As per reconciliation type, the global account reconciliation software market is divided into bank reconciliation, customer reconciliation, intercompany reconciliation, and others. The bank reconciliation segment was the highest contributor to the market and is estimated to grow at a CAGR of 13.2% during the forecast period. The rise in the adoption of the reconciliation process in banks and the fintech industry to ensure that cash records are correct to provide an easy and convenient method for cash accounts and bank statements drives the market growth. In addition, the rise in errors in the banking sector, such as calculation errors, double payments, and missed payments errors, propels bank reconciliation software growth. Furthermore, growth in the need to keep track of accounts payable and receivable is anticipated to provide lucrative opportunities for the market.

 Regarding industry verticals, the global account reconciliation software market is divided into BFSI, manufacturing, retail & eCommerce, healthcare, IT & telecom, energy & utilities, government & public, and others. The BFSI segment was the highest contributor to the market and is estimated to grow at a CAGR of 13.1% during the forecast period. The banking and insurance industry is one of the significant reconciliation users of the software, owing to the increase in the number of transactions per day in banking and financial institutions and the surge in the need to manage & control suspicious activities. In addition, the rise in the digitization of payments and the surge in financial frauds in the banking sector drive market growth. For instance, according to Fujitsu, a digital transformation for banking service report published in 2018, in Japan, digital payments have increased tremendously in the BFSI sector, which is anticipated to improve the efficiency of the banking sector by 31% and drive cashless transactions in the future.

Recent Developments

• February 2022 - Building on its investment in the Google Cloud Platform two years ago, BlackLine, Inc. (Nasdaq: BL) announced it is joining forces with Google Cloud once again to bring enhanced automation solutions for finance and accounting (F&A) to organizations around the world. Under the terms of a new agreement, the two companies will collaborate on joint selling and go-to-market activities to further help companies on their digital finance transformation and modern accounting journeys.
• January 2022 - Accounting automation software leader BlackLine, Inc. (Nasdaq: BL) announced today that it had acquired FourQ Systems, Inc., a leader in intercompany financial management technology. With FourQ, BlackLine enhances its existing intercompany accounting automation capabilities, further strengthening its position with the Office of the Controller by driving end-to-end automation of traditionally manual intercompany accounting processes and accelerating BlackLine's more significant, long-term plan for transforming and modernizing finance and accounting (F&A).